upscvision.org
upscvision.org/
3️⃣
NCERT Notes/
3️⃣
✅Class 11 : Indian Economic Development
Search
3️⃣

✅Class 11 : Indian Economic Development

Unit 1 - Development Policies & Experiences
Boxed Concepts
Textile Industry in Bengal: Overview
  • Origin: Bengal region, specifically areas surrounding Dhaka (previously spelled "Dacca").
  • Modern relevance: Dhaka is now the capital of Bangladesh.
  • Global recognition: Famous for the production of an exquisite type of cotton textile globally.
2. Muslin: Specifics
  • Material: Type of cotton textile.
  • Notable variety: "Daccai Muslin" is renowned worldwide.
  • Specialty: Noted for its fine quality and craftsmanship.
3. Varieties and Nomenclature
  • Finest type: Malmal.
  • Alternative names: Sometimes referred to by foreign travelers as:
    • "Malmal Shahi" - denoting its use by or its suitability for royalty.
    • "Malmal Khas" - implies an exclusive, royal quality.
Pre-British India Agriculture: Overview
  • Context: Bengal in the 17th century, as observed by the French traveler, Bernier.
  • Comparison: Described as richer than Egypt based on its abundant resources.
2. Major Exports:
  • Cottons and silks: Large quantities produced and sent abroad.
  • Rice: One of the primary exports.
  • Sugar: Abundantly produced and exported.
  • Butter: Included in the list of major exports.
3. Local Consumption:
  • Wheat: Sufficiently produced for domestic use.
  • Vegetables: Various types grown for local consumption.
  • Grains: A staple item in local diets.
  • Poultry and livestock: Includes fowls, ducks, geese, pigs, sheep, and goats.
  • Fish: Available in profusion, showcasing the region's rich aquatic resources.
4. Infrastructure and Irrigation:
  • Canals: Numerous waterways, cut from the Ganges in ancient times.
  • Purposes of canals:
    • Navigation: Facilitating transport and communication.
    • Irrigation: Enhancing agricultural productivity.
5. Area of Focus:
  • Geographical stretch: From Rajmahal to the sea, indicating the expanse covered by the canal network.
Suez Canal Trade
notion image
1. Suez Canal: Introduction
  • Definition: An artificial waterway in north-eastern Egypt.
  • Location: Stretches from the Isthmus of Suez, connecting Port Said (Mediterranean Sea) and the Gulf of Suez (Red Sea).
2. Importance in Trade:
  • Function: Provides a direct maritime route between Europe/America and South Asia, East Africa, Oceania.
  • Alternative: Eliminates the need for ships to navigate around Africa, saving time and resources.
3. Strategic and Economic Significance:
  • Global standing: Considered one of the world's most crucial waterways due to its strategic and economic impact.
  • Impact on trade:
    • Cost-efficient: Reduces the expenses associated with maritime transport.
    • Access: Facilitates easier access to the Indian market and others.
4. Historical Aspect:
  • Inauguration: Opened in 1869, marking a significant shift in global trade patterns
Understanding Economic Systems
1. Fundamental Economic Questions: Every society needs to determine:
  • What goods and services should be produced?
  • How should these goods and services be produced?
  • How should the produced goods and services be distributed among the population?
2. Types of Economic Systems:
2.1 Capitalism (Market Economy): - Mechanism: Relies on market forces of supply and demand. - Production: Focuses on goods/services with profitable demand. - Method: Depends on the cost-effectiveness of labor vs. capital. - Distribution: Based on purchasing power, not individual needs. Those without the means cannot access essential goods/services, potentially leading to societal inequity.
2.2 Socialism: - Central Planning: The government dictates production, methods, and distribution, assuming it understands the population's needs. - Consumer Influence: Individual preferences are secondary to government decisions. - Equity Focus: Distribution aims to be need-based rather than purchase-based, theoretically offering essentials like health care to all, regardless of personal wealth. - Property Ownership: Predominantly state-owned, minimizing or eliminating private property. Examples include Cuba and China.
2.3 Mixed Economy: - Dual Function: Both the government and market forces determine production, methods, and distribution. - Market Role: Produces profitable goods/services efficiently. - Government Role: Provides essential goods/services not adequately covered by the market.
3. Nehru's Perspective:
  • Critique of Capitalism: Concern that capitalism would neglect the majority, restricting their life quality improvement opportunities.
  • Preference for Socialism: Favored an approach ensuring broader societal welfare and equity.
Understanding the Concept of a Plan
1. Definition of a Plan:
  • Function: A plan details the strategic utilization of a nation's resources.
  • Structure: Comprises general goals and specific objectives, aimed to be achieved within a set timeframe (e.g., five years for India's plans).
2. Duration and Types:
  • Five Year Plans: Adopted from the former Soviet Union's model, these plans set short-term objectives within a five-year period.
  • Perspective Plan: Outlines the long-term vision, extending to twenty years, setting a broader context within which five-year plans operate.
3. Plan Characteristics:
  • Flexibility in Goals: Not all goals are equally prioritized in every plan; emphasis varies based on the nation's immediate needs and long-term objectives.
  • Conflict of Interests: Goals might clash; for example, technological advancement might contradict employment growth if new technology decreases labor demand.
  • Balancing Act: Planners face the complex task of balancing conflicting goals, requiring strategic compromises and adjustments.
4. Implementation of Plans:
  • Selective Specificity: Unlike the former Soviet Union's overly detailed (and unsuccessful) approach, India's plans don't dictate the exact production quantities for every good/service.
  • Focus Areas: Plans emphasize sectors where government intervention is crucial, like power and irrigation, allowing market forces to dictate the rest.
5. Role of Market:
  • Complementary to Planning: The market determines the production of goods/services not specified in the plan, providing flexibility and practicality to the planning process.
Prasanta Chandra Mahalanobis and Indian Planning
1. Introduction
  • Pivotal Role: Prasanta Chandra Mahalanobis, a renowned statistician, played a fundamental role in the development of India's five-year plans, especially the Second Five Year Plan, which truly initiated planning in the profound sense.
  • Notable Contribution: His methodology and vision significantly influenced the goals and strategies of Indian planning.
2. Early Life and Education
  • Birth: Born in 1893 in Calcutta, India.
  • Education: 2.1. Attended Presidency College, Calcutta. 2.2. Studied at Cambridge University, England.
  • Recognition: Gained international distinction due to his contributions to statistics.
3. Career Highlights
  • Fellowship: Elected as a Fellow of Britain's Royal Society in 1945, a prestigious scientific organization reserved for highly eminent scientists.
  • Indian Statistical Institute (ISI): 3.1. Founded the ISI in Calcutta, an institution now renowned globally. 3.2. Launched "Sankhya," a respected journal for discussing statistical ideas.
  • Global Impact: Both ISI and Sankhya are esteemed worldwide among statisticians and economists.
4. The Second Five Year Plan
  • Plan Architect: Mahalanobis was the principal architect behind the Second Five Year Plan of India, setting foundational goals for the nation's planning process.
  • Socialist Principles: Despite criticism, the plan was heavily influenced by socialist ideals.
  • Inclusivity: Invited notable economists for counsel, including future Nobel laureates and those critical of his approach, indicating his openness to diverse perspectives.
5. Legacy
  • Debated Approach: While some economists today dispute Mahalanobis' planning approach, his role was crucial in setting India on the path of economic development.
  • Statistical Theory: His contributions to statistics continue to be valuable for modern statisticians.
6. Conclusion
  • Enduring Impact: Regardless of contemporary critique, Prasanta Chandra Mahalanobis' work, especially in the realm of economic planning and statistics, continues to hold significant historical and practical importance in India and globally
Service Sector in India
  • Definition: Evolution in a country's core economic sectors as it develops.
  • Typical progression: Initial dominance of agriculture, followed by industry, and then the service sector at higher development levels.
2. India's Unique Structural Change:
  • Historical context: Traditionally, a high reliance on agriculture (contributing over 50% to GDP), typical for developing economies.
  • Anomaly: By 1990, the service sector's contribution rose to 40.59%, surpassing both agriculture and industry. This pattern is more characteristic of developed countries.
3. The Service Sector's Growth:
  • Timeframe: Experienced significant growth post-1991.
  • Catalyst: The onset of globalization within the country (detailed discussion in chapter 3).
4. Comparison with Developed Nations:
  • Similarity: The high GDP contribution from the service sector aligns with trends seen in developed economies.
  • Contrast: This shift happened at a different developmental stage compared to usual economic progressions.
5. Economic Phases:
  • Agriculture: Over 50% contribution to GDP in the early stages, typical for a poorer country.
  • Industry: Expected to dominate before the service sector, but not observed in India's case.
  • Service Sector: Unusually, became dominant by 1990, more akin to patterns in developed countries.
Ownership & Incentive
1. Principle of 'Land to the Tiller':
  • Core Idea: Cultivators are more motivated to enhance output when they own the land they till.
  • Profit Motive: Ownership allows cultivators to directly benefit from increased outputs, thus incentivizing improvements.
2. Tenant Farmers' Dilemma:
  • Lack of Incentive: Tenants are less inclined to invest in land enhancements since the resulting benefits accrue more to landowners than to themselves.
3. Ownership as an Incentive - Case Study:
  • Context: Farmers' practices in the former Soviet Union.
  • Issue Observed: Careless packing of fruits, mixing rotten with fresh, leading to preventable losses.
  • Underlying Cause:
    • Absence of land ownership among farmers, resulting in no direct profit or loss from their yields.
    • Resultant lack of motivation to maintain quality, leading to inefficiencies.
4. Impact on Agricultural Efficiency:
  • Soviet Union's Underperformance: Despite vast fertile lands, the agricultural sector suffered due to the absence of ownership incentives.
  • Lack of Accountability: Without the prospect of personal gain or loss, there was no incentive for farmers to optimize their agricultural practices.
Price as Signals
1. Concept of Prices as Signals:
  • Function: Prices indicate the availability of goods in the market.
  • Reaction to Scarcity: When goods become scarce, prices rise, signaling consumers to use them more efficiently.
2. Price Fluctuations and Consumer Behavior:
  • Example: Water Scarcity:
    • Higher prices due to lower supply incentivize more judicious use, e.g., reducing garden watering.
  • Example: Petrol Prices:
    • Increases reflect greater scarcity, encouraging reduced consumption or exploration of alternative fuels.
3. Impact of Subsidies:
  • General Effect: Prevent prices from reflecting the true supply and scarcity of goods.
  • Resulting Issues:
    • Encourage wasteful consumption.
    • Distort understanding of resource scarcity.
    • May lead to environmental harm due to overuse of resources like fertilizers and pesticides.
4. Case Study: Agriculture:
  • Free Water: Leads to the cultivation of water-intensive crops even in water-scarce regions, depleting resources.
  • Effect of Realistic Pricing: If water price reflects scarcity, farmers are incentivized to grow crops suitable to the region's conditions.
5. Subsidies and Economic Wisdom:
  • Critical Thinking: Consider the impact of subsidies on resource use and the environment.
  • Discussion Point: Is it economically wise to provide free electricity to farmers? Consider the potential for wasteful resource use due to lack of proper price signals
Structural Change in India's Economy
1. Concept of Structural Change
  • Definition: As a country progresses, it experiences 'structural change,' a shift in the concentration of economic power among sectors — agriculture, industry, and services.
2. Typical Development Pattern
  • Agricultural Dominance: In the initial stages, agriculture employs the majority of the workforce and contributes the most to GDP.
  • Industrial Growth: With development, industry usually becomes the dominant sector.
  • Service Sector Prevalence: At higher development levels, the service sector's contribution to GDP surpasses the other two.
3. India's Unique Case
  • Initial Stage (Pre-1990) 3.1. Agriculture's Prominence: Contributing over 50% to GDP, agriculture's share was as expected for a developing nation. 3.2. Service Sector Surprise: Contrary to typical patterns, by 1990, services contributed 40.59% to GDP, more than agriculture or industry, akin to trends in developed countries.
  • Post-1991 Period 3.3. Globalisation Onset: The year 1991 marked the beginning of globalisation in India, to be detailed in Chapter 3. 3.4. Service Sector Surge: Post-1991, the service sector's growth accelerated, diverging further from the expected developmental trajectory.
4. Analysis
  • Peculiarity: India’s structural change deviates from the norm, with the service sector taking precedence much earlier in its development stage, skipping the dominance of industry usually seen in other economies.
  • Globalisation's Impact: The 1991 economic reforms and subsequent opening up of the Indian economy seem to have played a significant role in this accelerated service sector growth.
5. Conclusion
  • Significance: Understanding India's unique structural change is crucial, as it highlights non-linear pathways in economic development and raises questions about traditional economic models and their applicability to diverse economies
Navratna's
1. Navratnas in Historical and Modern Context:
  • Historical Reference: The term "Navratnas" originally referred to the nine jewels or talented individuals in King Vikramaditya's court, excelling in arts, literature, and knowledge.
  • Modern Adaptation: In the contemporary economic context, "Navratnas" refers to top-performing Public Sector Enterprises (PSEs) granted operational autonomy to enhance efficiency and competitiveness.
2. Classification of PSEs:
  • Maharatnas: Highest level of autonomy, e.g., Indian Oil Corporation Limited, Steel Authority of India Limited.
  • Navratnas: Considerable autonomy, e.g., Hindustan Aeronautics Limited, Mahanagar Telephone Nigam Limited.
  • Miniratnas: Lesser autonomy compared to the above, still operationally independent, e.g., Bharat Sanchar Nigam Limited, Airport Authority of India, Indian Railway Catering and Tourism Corporation Limited.
3. Objectives Behind PSEs:
  • Historical Establishment: Initiated primarily in the 1950s and 1960s.
  • Purpose: Promoting self-reliance, providing essential infrastructure, creating direct employment, and ensuring the delivery of quality products/services at reasonable costs.
  • Accountability: PSEs were accountable to all stakeholders, ensuring public welfare orientation.
4. Autonomy and Performance:
  • Operational Independence: Granting of Maharatna, Navratna, and Miniratna statuses provided enterprises with greater managerial, financial, and operational autonomy.
  • Result: Improved performance and increased profits due to enhanced decision-making capabilities.
5. Controversies and Future Directions:
  • Disinvestment Criticism: Scholars argue that partial privatization through disinvestment didn't facilitate global expansion but rather limited PSEs.
  • Current Strategy: The government aims to retain these enterprises in the public sector, enabling global market expansion and allowing them to raise resources independently.
Global Footprint
1. Globalization and Indian Companies:
Overview: Globalization has enabled numerous Indian companies to expand internationally, establishing a significant global presence.
2. Examples of Indian Companies with Global Operations:
  • ONGC Videsh:
    • Industry: Oil and Gas.
    • Details: Subsidiary of Oil and Natural Gas Corporation, involved in exploration and production.
    • Global Reach: Projects in 16 countries.
  • Tata Steel:
    • Industry: Steel.
    • Details: Established in 1907, ranks among the top ten global steel companies.
    • Global Reach: Operations in 26 countries, products sold in 50 countries, employs about 50,000 people abroad.
  • HCL Technologies:
    • Industry: Information Technology.
    • Details: One of India's top five IT companies.
    • Global Reach: Offices in 31 countries, around 15,000 international employees.
  • Dr Reddy's Laboratories:
    • Industry: Pharmaceuticals.
    • Details: Started as a supplier for Indian companies, now a significant global player.
    • Global Reach: Manufacturing plants and research centers worldwide.
3. Impact of Globalization:
  • Economic Growth: Expansion abroad contributes significantly to the companies' growth and influence.
  • Employment: Generates jobs both within India and in the countries where they operate.
  • Innovation and Competition: Presence in global markets leads to greater innovation and competitiveness.
Sircilla Tragedy
1. Context: Power Sector Reforms and Impact on Small Industries
  • Background:
    • Reforms led to the elimination of subsidized electricity rates, causing a significant increase in power tariffs.
    • Affected Sector: Small industries, particularly the powerloom textile industry in Andhra Pradesh, were severely impacted.
    • Consequence: Workers’ wages, tied to cloth production, suffered due to power cuts and higher tariffs. This led to the "Siricilla Tragedy" where 50 powerloom workers in Siricilla, Andhra Pradesh, committed suicide.
2. Critical Questions and Analytical Suggestions:
  • Question 1: Should power tariffs be raised?
    • Considerations:
      • Economic Sustainability: While higher tariffs can reflect the true cost of electricity and potentially lead to more sustainable energy use, they can also impose a burden on low-income and marginal industries, leading to adverse social impacts.
      • Social Responsibility: The government has a role in ensuring that essential services like electricity are affordable for all, especially vulnerable sectors.
  • Question 2: How to revive small industries affected by reforms?
    • Strategic Subsidies: Implement targeted subsidies or a tiered tariff system where small industries receive electricity at a lower rate, ensuring their operational continuity.
    • Alternative Energy Solutions: Encourage and subsidize the adoption of renewable energy sources (solar, wind) within small industries to reduce dependence on traditional electricity.
    • Skill Development & Diversification: Programs to help workers upgrade skills or diversify their products/services to reduce reliance on power-intensive operations.
    • Access to Capital: Easier access to low-interest loans or government grants to help industries upgrade to more energy-efficient machinery.
    • Community Support Programs: Mental health and community support for workers facing economic hardships to prevent tragedies like Siricilla.
Physical & Human Capital
Aspect
Physical Capital
Human Capital
Formation and Investment Decisions
- Based on expected returns. - Economic and technical process. - Driven by investor's conscious choices.
- Begins in early life, often without individual's decision. - Influenced by societal factors and existing human capital. - Part social process, part individual's decision.
Ownership and Tangibility
- Tangible assets. - Ownership separate from owner's presence - Sold as a commodity.
- Intangible, inherent in the individual. - Services sold, requiring individual's presence - Cannot be separated from the individual.
Mobility
- High international mobility, except for trade barriers - Can be acquired through imports.
- Limited mobility due to nationality, cultural barriers. - Developed domestically through policies and expenditures.
Depreciation
- Depreciates with use and technology changes - Obsolescence is common.
- Depreciates with aging, reduced through continuous investment - Can adapt to technological changes.
Benefits
- Generates private benefits for owners or service payers.
- Creates both private and social benefits - Contributes to socio-economic progress, health, and democratic processes.
India Knowledge Based Economy
The proposition of India evolving into a knowledge-based economy through the use of IT opens up significant avenues for development, especially in rural areas. However, whether IT-based services in these regions will lead to human development is a multifaceted issue that requires a nuanced approach. Here are several perspectives to consider:
  1. Education and Skill Development:
      • Positive: IT can enable access to educational resources and specialized training for people in rural areas, who otherwise might not have such opportunities. Online learning platforms can offer skills development that can lead to better employment prospects.
      • Challenge: The success of such initiatives depends on the initial level of education and digital literacy among the residents, as well as the availability of necessary infrastructure like electricity and internet connectivity.
  1. Healthcare Access:
      • Positive: Telemedicine and online health consultations can make healthcare more accessible in remote areas, contributing significantly to human development.
      • Challenge: The effectiveness of these services relies on the availability of advanced medical facilities and trained medical professionals in proximity to these areas.
  1. Economic Opportunities:
      • Positive: E-commerce and online marketplaces can allow local producers and artisans to reach a wider market, improving livelihoods and economic well-being.
      • Challenge: These individuals need to have or develop a certain level of entrepreneurial skill and digital know-how to fully benefit from these platforms.
  1. Governance and Civic Services:
      • Positive: E-governance can streamline civic services, improve the transparency of government operations, and facilitate more straightforward, corruption-free interactions between citizens and the government.
      • Challenge: Full benefits require a pervasive level of digital literacy, and there's a risk of marginalizing those who are not digitally savvy.
  1. Social Aspects and Quality of Life:
      • Positive: Connectivity can lead to a better quality of life by providing access to information, facilitating social interactions, and even offering entertainment.
      • Challenge: There is a need to ensure that the social and cultural fabric of rural communities is not disrupted negatively through exposure to potentially harmful online content.
  1. Infrastructure and Investment:
      • Necessity: For IT-based services to be effective, significant investment in infrastructure is essential. This includes not just digital infrastructure, but also electricity, transportation, and more.
      • Challenge: Without this investment, and without policies that ensure the affordability of access to technology, there's a risk of widening the digital divide and increasing inequality.
In conclusion, while IT-based services hold immense potential for human development in rural areas, this is not automatic. It requires comprehensive strategies, significant investment in infrastructure, and programs that ensure digital literacy and address various socio-economic challenges. Additionally, it's crucial to have a holistic approach that includes the provision of essential services like education, healthcare, and economic development in tandem with the introduction of IT-based services.
Kudumbshree Kerala
"Kudumbashree," which translates to "prosperity of the family" in Malayalam, is a notable initiative that underscores the power of community participation, especially among women, in battling poverty and promoting economic self-sufficiency. Here's a detailed look at this program:
Overview:
  • "Kudumbashree" was launched by the Government of Kerala in 1998 with the aim to eradicate absolute poverty within a period of 10 years through concerted community action under the leadership of Local Self Governments.
  • It is one of the largest women-empowering projects in the country, building on the idea that social and economic empowerment are necessary for women's participation in local governance.
Key Features:
  1. Community-Based Approach: The program is implemented through Community Development Societies (CDSs) comprising neighborhood groups of poor women. This grassroots structure enables women to participate directly and take charge of their development needs and priorities.
  1. Micro-Savings and Credit Societies: The initiative encourages women to save and contributes towards a collective fund. These savings, although small, accumulate into a significant corpus. Members can borrow from this fund at low interest rates, in stark contrast to the exorbitant rates charged by traditional moneylenders.
  1. Micro-enterprises Development: By providing access to credit, skill development, and marketing, the initiative supports women in setting up their own small businesses. This not only boosts income levels but also enhances women’s statuses within their families and communities.
  1. Convergence of Services: "Kudumbashree" links women with government departments, banks, and other institutions, helping them access social and economic services and entitlements.
Impact:
  • The program has been successful in mobilizing significant amounts of savings, demonstrating that even low-income households have the capacity to save and invest.
  • It has enhanced women’s financial literacy and management skills.
  • By providing an alternative to high-interest informal credit sources, it has reduced women’s vulnerabilities to such debts.
  • The collective model has fostered a sense of solidarity among women, empowering them socially and politically.
  • It has also stimulated entrepreneurship, leading to income generation and improved livelihoods.
Challenges:
  • While "Kudumbashree" has made substantial strides, challenges remain, such as reaching the most marginalized women, ensuring the sustainability of enterprises, and addressing social barriers that women may face.
  • Periodic skill enhancement, market research, and product development are necessary to ensure the competitiveness and sustainability of the micro-enterprises.
The success of "Kudumbashree" lies in its community-based approach, enabling women to become both the beneficiaries and agents of their development. This model's efficacy has made it a subject of study and replication for similar initiatives in other regions.
Tamil Nadu Women in Agriculture (TANWA)
The Tamil Nadu Women in Agriculture (TANWA) project is a remarkable initiative that underscores the critical role women play in agriculture, particularly in regions where they constitute a significant portion of the agricultural workforce. This project not only empowers women but also contributes to agricultural innovation, environmental sustainability, and local economic development. Here's a more detailed breakdown:
Overview:
  • TANWA was initiated to shift the traditional perception of women as mere helpers in agriculture to that of active contributors to agricultural growth and family income.
  • The project's primary focus is on training women in modern and sustainable agricultural practices, thereby increasing agricultural productivity and promoting environmental conservation.
Key Features:
  1. Training and Skill Development: Women are trained in the latest agricultural techniques, including organic farming, integrated pest management, and efficient water use. This education helps improve crop yields and quality while ensuring environmental sustainability.
  1. Empowerment through Entrepreneurship: By learning to produce and sell agricultural products like vermicompost, women can earn an independent income. This economic empowerment is a crucial step towards gender equality in regions where women's financial autonomy may be limited.
  1. Micro-Credit and Savings Groups: The formation of Farm Women’s Groups that act as mini banks is vital. These groups facilitate savings and provide micro-credits, empowering women to invest in small-scale enterprises that further enhance their families' incomes and livelihood security.
  1. Diversification of Activities: Beyond mainstream farming, women are encouraged to engage in additional income-generating activities like mushroom cultivation, soap making, or doll making. This diversification not only boosts income but also reduces economic risks associated with relying solely on farming.
Impact:
  • Increased agricultural productivity and household income, improving overall family welfare.
  • Promotion of sustainable farming practices, contributing to environmental conservation.
  • Enhanced social status for women within their communities due to their newfound skills and economic contributions.
  • Creation of a supportive network among women, fostering a sense of community, shared learning, and mutual emotional and financial support.
Challenges:
  • Despite its successes, projects like TANWA often face challenges such as ensuring consistent funding, confronting traditional gender norms that may restrict women's participation, and accessing broader markets for the sale of their products.
Community Involvement:
  • If similar initiatives exist in your area, engaging with them can be incredibly insightful. You might consider inviting women entrepreneurs from these projects to share their experiences with your class or group. Hearing their stories firsthand not only provides inspiration but also deepens understanding of the practical challenges and triumphs such projects entail.
Sansad Adarsh Gram Yojana
The Saansad Adarsh Gram Yojana (SAGY) was a novel initiative by the Government of India aimed at the holistic development of villages. This scheme leveraged the leadership capacity and influence of Members of Parliament (MPs) to transform villages into "model" villages or Adarsh Grams. Here's a more detailed breakdown of the program and its implications:
Objective: The primary objective of SAGY was to trigger processes that lead to holistic development in the rural areas of India. By encouraging MPs to take the lead in developing model villages, the scheme aimed to improve the standard of living and quality of life in these areas by enhancing local infrastructure, community services, and economic opportunities.
Key Features:
  1. Identification of Villages: Each MP had to identify a village (excluding their own or their spouse's) with a population of 3,000-5,000 in plains or 1,000-3,000 in hilly areas. The idea was to transform these villages into models of development.
  1. Holistic Development: The program was designed to address various facets of development. This included:
      • Social development programs, including healthcare, sanitation, and education.
      • Economic development activities to bolster local economies, promote sustainable livelihoods, and reduce poverty.
      • Infrastructure development to improve access to essential services and connectivity to nearby areas.
  1. Village Development Plans: MPs were responsible for facilitating the creation of comprehensive development plans tailored to the specific needs and potential of the selected villages. These plans were to be formulated in consultation with the village community, local institutions, and relevant experts.
  1. Community Participation: An essential aspect of SAGY was the active involvement of the local community. The scheme emphasized social mobilization and fostering a participatory approach to decision-making, implementation, and monitoring.
  1. Sustainability and Replicability: The intention was not just to develop these villages for a short term but to ensure that the growth was sustainable and that the model could be replicated in other villages.
Implications:
  • Positive Outcomes: Ideally, the successful implementation of SAGY would result in improved living standards, better health and education services, increased economic opportunities, and enhanced social cohesion in the model villages.
  • Challenges: However, the scheme also faced several challenges, including the effective mobilization of resources, ensuring community participation, overcoming bureaucratic hurdles, and maintaining sustained interest and commitment from MPs and local governance structures.
  • Lessons and Adaptation: The experiences from these model villages were also expected to provide valuable lessons for rural development, informing policies and strategies that could be adapted and applied across the country.
The success of SAGY would ultimately depend on the collaborative efforts of MPs, local governments, communities, and various stakeholders committed to bringing about transformative change in rural India.
Organic Food
Organic food is growing in popularity across the world. Many countries have around 10 per cent of their food system under organic farming. There are many retail chains and supermarkets which are accorded with green status to sell organic food. Moreover, organic foods command higher price of around 10-100 per cent than conventional ones.
Organically Produced Cotton in Maharashtra
1. Introduction to Organic Cotton
  • In 1995, the concept was introduced by Kisan Mehta of Prakruti (NGO).
  • Initial skepticism was high; concerns were raised about India's ability to sustain cotton production without chemicals.
2. Transition to Organic Practices
  • Over time, 130 farmers transitioned to organic cotton farming.
  • They dedicated 1,200 hectares of land, adhering to the International Federation of Organic Agriculture Movement’s standards.
3. Validation of Organic Cotton
  • The produce underwent testing by AGRECO, a German Accredited Agency.
  • Results: The organic cotton was confirmed to be of high quality.
4. Advocacy for Marginal Farmers
  • Kisan Mehta highlighted the plight of marginal farmers: a. They constitute about 78 per cent of Indian farmers. b. They own less than 0.8 hectare each. c. They account for 20 per cent of India’s cultivable land.
  • Mehta's argument: a. Organic farming is more profitable for these farmers. b. Benefits not just in terms of money, but also long-term soil conservation.
5. Interactive Learning
  • Suggestion for practical learning: Visit a local farm practicing organic farming.
  • Objectives: a. Understand the practical uses and benefits of organic manure and farming methods. b. Compile observations and discussions into a report. c. Present findings and insights in class for collaborative learning
Formal Sector in India
1. Data Collection on Formal Sector Employment
  • Managed by the Union Ministry of Labour.
  • Methodology: Utilizes employment exchanges across the country.
2. Major Employer in the Formal Sector (as of 2012)
  • The public sector is the leading employer.
  • Statistics: a. Total formal sector workers: Approximately 30 million. b. Employed by the public sector: Roughly 18 million.
3. Gender Disparity in the Formal Sector
  • Predominant workforce: Men.
  • Women representation: Only about one-sixth of the total formal sector workforce.
4. Impact of Economic Reforms (since the early 1990s)
  • Observed outcome: Reduction in formal sector employment.
  • Economists' viewpoint: The reform process has influenced the decline.
Informalisation in Ahmedabad
  1. Background 1.1. City Profile: Ahmedabad, a prosperous city known for its textile industry. 1.2. Economic Foundation: Over 60 textile mills. 1.3. Workforce: 150,000 workers employed in these mills.
  1. Worker's Security (Pre-1980s) 2.1. Employment Stability: Workers enjoyed secure jobs with living wages. 2.2. Social Security: Had access to schemes for health and old age. 2.3. Union Support: Strong trade union presence for dispute resolution and welfare activities.
  1. Shift in the 1980s 3.1. Mill Closures: Early 1980s, textile mills began shutting down nationwide. 3.2. Impact in Ahmedabad: Process lasted 10 years in the city.
  1. Consequences of Mill Closures 4.1. Job Losses: Around 80,000 permanent and over 50,000 non-permanent workers impacted. 4.2. Economic Recession: Significant downturn in the city’s economy. 4.3. Social Unrest: Period marked by public disturbances and communal riots.
  1. Downward Social Mobility 5.1. Informal Sector Shift: Displaced workers pushed into informal jobs. 5.2. Poverty: Significant descent from middle class to poverty. 5.3. Psychosocial Impact: Increase in alcoholism and suicides.
  1. Impact on Families 6.1. Education: Children pulled out of school. 6.2. Child Labor: Many children forced into work due to familial economic strain.
Global Warming
1. Understanding Global Warming:
  • Definition: A gradual increase in Earth's lower atmospheric temperature due to a rise in greenhouse gases since the Industrial Revolution.
  • Characteristic: Largely human-induced through activities causing greenhouse gas emissions.
2. Causes of Global Warming: 2.1. Human Activities: - Burning of fossil fuels: Releases carbon dioxide and other greenhouse gases. - Deforestation: Increases the amount of carbon dioxide in the atmosphere. 2.2. Agricultural Practices: - Methane release: From animal waste and increased cattle production. - Contribution to deforestation and fossil fuel use: Via cattle farming practices.
3. Greenhouse Gases and Their Impact:
  • Increase since 1750: Carbon dioxide up by 31%, methane by 149%.
  • Heat absorption: These gases trap heat, causing the Earth’s surface to warm.
4. Observed Changes:
  • Temperature rise: Earth's temperature up by 1.1°F (0.6°C) in the past century.
  • Sea-level rise: Several inches due to polar ice melting.
5. Consequences of Global Warming: 5.1. Environmental: - Melting of polar ice: Leads to rising sea levels and coastal flooding. - Disruption of water supplies: Due to dependency on snow melts. - Extinction of species: As ecological niches vanish. 5.2. Weather Patterns: - More frequent tropical storms. - Increased incidence of tropical diseases.
6. Efforts to Combat Global Warming:
  • Kyoto Protocol (1997): International agreement from a UN conference in Japan.
  • Objective: Reductions in greenhouse gas emissions by industrialized nations.
Ozone Depletion
1. Understanding Ozone Depletion:
  • 1.1 Definition:
    • Ozone depletion is the reduction of ozone in the Earth's stratosphere.
  • 1.2 Causes:
    • Mainly due to chlorine and bromine compounds.
    • Originates from human-made sources:
      • Chlorofluorocarbons (CFCs): Used in air conditioners, refrigerators, and aerosol propellants.
      • Bromofluorocarbons (Halons): Used in fire extinguishers.
  • 1.3 Consequences:
    • Increased ultraviolet (UV) radiation reaching Earth.
    • Harmful effects on living organisms:
      • Skin cancer in humans.
      • Reduced phytoplankton production, affecting aquatic life.
      • Potential impact on terrestrial plant growth.
2. Historical Context:
  • 2.1 Timeline:
    • About 5% reduction in the ozone layer from 1979 to 1990.
  • 2.2 Global Response:
    • The Montreal Protocol:
      • An international agreement to phase out the use of substances responsible for ozone depletion.
      • Specific substances include:
        • CFCs
        • Carbon tetrachloride
        • Trichloroethane (methyl chloroform)
        • Halons (bromine compounds)
3. Importance of the Ozone Layer:
  • 3.1 UV Radiation Filtering:
    • Essential in blocking most harmful UV wavelengths.
    • Prevents these wavelengths from penetrating Earth's atmosphere.
  • 3.2 Concerns Over Depletion:
    • Decreases in ozone layer have prompted global concern.
    • Direct correlation with health and environmental risks.
Chipko & Appiko Movement
1. Movement Origins:
  • 1.1 Chipko Movement:
    • Aimed at protecting forests.
    • Originated in the Himalayas.
  • 1.2 Appiko Movement:
    • Similar to Chipko but named 'Appiko' meaning 'to hug' in Karnataka.
    • Initiated on September 8, 1983, in Salkani forest, Sirsi district.
2. Appiko Movement's Inception:
  • 2.1 Initial Event:
    • 160 individuals including men, women, and children protested by hugging trees.
    • Successfully forced woodcutters to abandon their task.
  • 2.2 Ensuing Vigil:
    • Spanned six weeks to protect the trees.
    • Ended after assurance from officials for scientific tree cutting as per the district's working plan.
3. Movement's Impact:
  • 3.1 Immediate Results:
    • Prevented felling, saving approximately 12,000 trees.
  • 3.2 Long-term Effects:
    • Spread rapidly to neighboring districts.
    • Highlighted environmental issues and empowered local communities.
4. Environmental Concerns:
  • 4.1 Deforestation Consequences:
    • Led to loss of biodiversity (e.g., bamboo extinction in Uttar Kanara).
    • Resulted in soil degradation and vulnerability to erosion.
    • Contributed to water scarcity and erratic rainfall.
    • Introduced new crop diseases and pests.
5. Appiko's Demands:
  • 5.1 Inclusive Decision-making:
    • Local communities to be consulted during the tree-marking process.
  • 5.2 Sustainable Forestry:
    • Prohibition of tree felling within 100 metres of water sources and on steep slopes (30 degrees or above).
6. Industrial Impact on Forests:
  • 6.1 Government's Role:
    • Allocation of forestlands to industries, utilizing them as sources of raw materials.
  • 6.2 Societal Dilemma:
    • Employment versus environmental degradation.
    • Factories (e.g., paper mills, plywood factories) provide jobs but potentially at the expense of the environment and resources vital for local populations
Pollution Control Board
1. Introduction to Pollution Control Boards:
  • 1.1 Purpose: Address major environmental concerns in India, primarily focusing on water and air pollution.
  • 1.2 Establishment:
    • Central Pollution Control Board (CPCB) established in 1974.
    • Followed by state-level boards for regional environmental concerns.
2. Functions and Responsibilities:
  • 2.1 Investigation and Information Dissemination:
    • Investigate and gather data on pollution (water, air, land).
    • Disseminate relevant information.
  • 2.2 Standards and Technical Assistance:
    • Establish standards for sewage/trade effluent and emissions.
    • Provide technical support for cleanliness and pollution control.
  • 2.3 Research and Awareness:
    • Conduct and sponsor research on pollution control.
    • Promote mass awareness through various media.
  • 2.4 Documentation:
    • Prepare manuals, codes, and guidelines for effluent treatment and disposal.
3. Assessment and Regulation:
  • 3.1 Air Quality and Industry Regulation:
    • Assess air quality and regulate industries.
    • Periodic inspections to evaluate treatment measures for effluents and emissions.
    • Provide air quality data for industrial siting and town planning.
  • 3.2 Water Quality Monitoring:
    • Monitor water quality in various bodies (e.g., rivers, wells, lakes, etc.).
    • Collect, collate, and disseminate data on water pollution.
4. Practical Engagement:
  • 4.1 Field Visits:
    • Visit factories or irrigation departments to observe pollution control measures firsthand.
  • 4.2 Collection of Awareness Materials:
    • Gather news clippings, pamphlets, etc., on pollution awareness programs.
    • Discuss the collected materials in the classroom.
Chapter 1 - Development of Policies & Experiences (1947-90)
1.2 LOW LEVEL OF ECONOMIC DEVELOPMENT UNDER THE COLONIAL RULE
India's Pre-Colonial Economy
  • India had a self-sustaining economy before British colonization.
  • Agriculture was the primary livelihood, but various manufacturing activities also thrived.
  • Notable industries included cotton and silk textiles, metalwork, and precious stone craftsmanship.
  • Indian products were renowned for their high quality and craftsmanship, enjoying global demand.
Impact of Colonial Economic Policies
  • Colonial policies prioritized Britain's economic interests over India's development.
  • The Indian economy transformed into a supplier of raw materials and a consumer of British industrial products.
  • Colonial government neglected estimating India's national and per capita income.
Notable Estimators
  1. Dadabhai Naoroji
  1. William Digby
  1. Findlay Shirras
  1. V.K.R.V. Rao
  1. R.C. Desai
Significance of V.K.R.V. Rao's Estimates
  • Rao's estimates during the colonial period were considered significant.
  • Studies found India's growth of aggregate real output in the first half of the twentieth century to be less than two percent.
  • Per capita output grew by a meager half percent per year.
1.3 AGRICULTURAL SECTOR
  • Background
    • India during British colonial rule was predominantly agrarian.
    • About 85% of the population lived in villages, depending on agriculture.
  • State of Agriculture
      1. Stagnation & Deterioration: Despite being the primary occupation, agriculture faced stagnation and occasional deterioration.
      1. Low Productivity: Agricultural productivity was low, though there was some growth due to increased cultivated area.
      1. Land Settlement Systems: Stagnation primarily due to various land settlement systems introduced by the colonial government.
  • Zamindari System
      1. Implemented in the Bengal Presidency (parts of present-day eastern states).
      1. Profit Distribution: Profits from agriculture went to zamindars instead of cultivators.
      1. Zamindars' Role: Many zamindars did not work towards improving agriculture. Their main interest was rent collection, irrespective of cultivators' economic state.
      1. Revenue Settlement Terms: Zamindars had fixed dates to deposit specified revenue sums. Failure led to loss of their rights.
  • Factors Aggravating Agricultural Woes
      1. Low Technology Levels: Advanced technology was scarcely used.
      1. Inadequate Irrigation: Lack of proper irrigation facilities.
      1. Minimal Use of Fertilisers: Fertilisers were rarely used, affecting crop yield.
      1. Focus on Cash Crops: Some farmers shifted to cash crops due to the commercialisation of agriculture. This did not benefit them economically as these crops were used by British industries.
      1. Lack of Investment: Despite some advancements in irrigation, there was a lack of investment in terracing, flood-control, drainage, and soil desalinisation.
  • Farmer's Plight
      1. Change in Cropping Pattern: A small section of farmers changed from food crops to commercial crops.
      1. Majority Suffered: Most tenants, small farmers, and sharecroppers lacked resources, technology, and incentives to invest in agriculture.
1.4 INDUSTRIAL SECTOR
1. Colonial Impact on Industry
  • Lack of a sound industrial base due to colonial rule.
  • Decline of world-renowned handicraft industries without the establishment of a modern industrial base.
  • Primary Motives for De-Industrialisation:
      1. Transform India into a raw material supplier for British industries.
      1. Convert India into a consumer market for British finished products.
  • Outcomes:
    • Massive unemployment.
    • Increased demand in Indian markets met by imports from Britain.
2. Emergence of Modern Industry
  • Slow progress during the second half of the 19th century.
  • Initial development:
    • Cotton textile mills, primarily in western India (Maharashtra and Gujarat).
    • Jute mills, mainly in Bengal and dominated by foreigners.
  • Early 20th century: Commencement of iron and steel industries.
    • Notable development: Tata Iron and Steel Company (TISCO) in 1907.
  • Post-World War II: Emergence of other industries (e.g., sugar, cement, paper).
3. Lack of Capital Goods Industry
  • Absence of industries producing machine tools (capital goods) critical for further industrialisation.
  • Scattered manufacturing units insufficient to counter the decline of handicrafts.
4. Minimal Impact on Economy
  • Limited growth rate of the industrial sector.
  • Minimal contribution to Gross Domestic Product (GDP) or Gross Value Added.
5. Restricted Public Sector Operations
  • Confined to railways, power generation, communications, ports, and some departmental undertakings.
  • Limited scope in promoting industrial growth.
1.5 FOREIGN TRADE
1. Historical Context
  • India's prominence in trade since ancient times.
  • Colonial policies negatively impacted commodity production, trade structure, and volume.
2. Colonial Restrictive Policies
  • India transformed into:
      1. Exporter of primary products (e.g., raw silk, cotton, wool, sugar, indigo, jute).
      1. Importer of finished consumer goods (e.g., clothes, light machinery) from Britain.
  • Britain's monopoly over Indian trade:
    • Over half of trade exclusive with Britain.
    • Limited trade with nations like China, Ceylon (Sri Lanka), and Persia (Iran).
  • Suez Canal's opening: Strengthened British control.
3. Export Surplus: High Economic Cost
  • Significant export surplus generated during colonial times.
  • Detrimental consequences:
    • Scarcity of essential commodities domestically (food grains, clothes, kerosene).
    • Surplus didn't attract gold/silver to India.
    • Funds diverted for:
        1. Colonial office expenses in Britain.
        1. War expenses incurred by Britain.
        1. Import of non-tangible goods.
    • Resulted in substantial economic drain
1.6 DEMOGRAPHIC CONDITION
1. Introduction to Census in India
  • First comprehensive census: 1881.
  • Highlighted uneven population growth.
  • Conducted every ten years thereafter.
2. Stages of Demographic Transition
  • Pre-1921: First stage of demographic transition.
  • Post-1921: Second stage commences.
    • Noteworthy points:
        1. Neither total population nor growth rate exceptionally high during this period.
3. Social Development Indicators
  • Disheartening statistics during the colonial era:
      1. Literacy:
          • Below 16% overall.
          • Female literacy especially low, around 7%.
      1. Public Health:
          • Inadequate or unavailable facilities for most of the population.
          • Rampant water and air-borne diseases.
          • High mortality rates, particularly alarming infant mortality (218 per thousand).
      1. Life Expectancy:
          • Extremely low at approximately 32 years.
      1. Poverty:
          • Extensive throughout the colonial period, contributing to deteriorating population conditions.
          • Lack of concrete data prevents precise quantification
1.7 OCCUPATIONAL STRUCTURE
1. Overview
  • During colonial times, India's occupational structure remained largely unchanged.
  • Dominated by the agricultural sector, with minimal shifts toward manufacturing and services.
2. Sector-wise Workforce Distribution
  • Agriculture: Consistently high, absorbing 70-75% of the workforce.
  • Manufacturing: Minimal, only around 10%.
  • Services: Slightly higher, at 15-20%.
3. Regional Variations
  • Notable changes in Madras Presidency (current Tamil Nadu, Andhra Pradesh, Kerala, Karnataka), Bombay, and Bengal:
    • Decreased reliance on agriculture.
    • Increased workforce in manufacturing and services.
  • Contrasting increase in agricultural workforce in Orissa, Rajasthan, and Punjab
1.8 INFRASTRUCTURE REVISION NOTES
1. Colonial Motive Behind Infrastructure
  • Development of railways, ports, water transport, posts, and telegraphs.
  • Primary intention: To serve colonial interests rather than the welfare of Indian citizens.
2. Road Infrastructure
  • Pre-British roads unsuitable for modern transport.
  • British-made roads:
    • Aimed at military mobilization and extracting raw materials.
    • Acute shortage of all-weather roads, especially impacting rural areas.
    • Result: Severe challenges during natural disasters and famines.
3. Railways
  • Introduced in 1850.
  • Dual impact on the Indian economy:
      1. Positive: Facilitated long-distance travel, breaking geographical and cultural barriers.
      1. Negative: Commercialization of agriculture harmed the self-sufficiency of villages.
  • Export volume increased, but benefits rarely reached Indians.
  • Economic loss outweighed the social benefits of the railways.
4. Waterways and Sea Lanes
  • Efforts to develop inland trade and sea lanes.
  • Often unsatisfactory or uneconomical, e.g., the Coast Canal on the Orissa coast.
    • Built at significant cost but couldn't compete with parallel railways and was abandoned.
5. Telegraph and Postal Services
  • Electric telegraph: Primarily for maintaining law and order.
  • Postal services:
    • Served a public purpose.
    • However, remained inadequate throughout the colonial period.
 
Chapter 2 - Indian Economy (1950-1990)
2.1 Introduction
1. Introduction to India's Independence:
  • Date of Independence: 15 August 1947 marked a significant turn in India's history as the nation gained autonomy after approximately 200 years of British colonization.
  • Challenge Post-Independence: The newfound freedom handed the responsibility of nation-building to the leaders of India, necessitating critical decisions about the economic framework that would govern the country to ensure comprehensive welfare.
2. Economic Systems:
  • Types: There exist various economic systems globally (refer to Box 2.1 for details).
  • Socialism's Appeal: Socialism, which emphasizes equal wealth distribution, resonated deeply with Jawaharlal Nehru, though he disapproved of the extreme socialism model adopted by the former Soviet Union, characterized by complete government ownership of production means.
3. India's Unique Model:
  • Democratic Socialism: India, valuing its democratic foundation, sought a balance between capitalism and socialism, aspiring to incorporate socialism's strengths while avoiding its extremes.
  • Combination Approach: The vision was for a socialist-oriented economy, where a robust public sector coexists with private property rights and democracy.
  • Government's Role: The government was to orchestrate economic planning, involving the private sector's contribution to the national developmental agenda.
4. Implementations of the Model:
  • Industrial Policy Resolution of 1948: This policy, along with the Directive Principles of the Indian Constitution, mirrored the nation's economic vision.
  • Planning Commission Inception: Established in 1950 and chaired by the Prime Minister, this commission signified the commencement of strategic economic planning.
  • Five Year Plans: The initiation of the Planning Commission marked the beginning of an era characterized by five-year plans, a systematic approach aimed at achieving comprehensive national development.
 
 
2.2 The Goals of Five Year Plan
1. The Premise of Five Year Plans:
  • Purpose: Five Year Plans were strategic blueprints for economic development, each with specific objectives.
  • Core Goals: The plans revolved around four primary goals: growth, modernisation, self-reliance, and equity. However, not all plans equally prioritized these goals due to resource constraints.
2. Detailed Overview of Core Goals:
2.1 Growth: - Definition: Refers to the enhancement of the country's capacity to increase the output of goods and services. - Indicators: Economic growth is often measured by a steady rise in Gross Domestic Product (GDP), which reflects the market value of all final goods and services produced domestically in a year. - Sectoral Contributions: Different sectors (agricultural, industrial, service) contribute variably to GDP. The structural composition of the economy depends on the relative growth of these sectors.
2.2 Modernisation: - Technological Aspect: Involves adopting new technology to increase productivity. Examples include farmers using new seed varieties and factories employing advanced machines. - Societal Aspect: Beyond technology, modernisation encompasses social changes, notably recognizing women's equal rights and incorporating their talents in various professional sectors.
2.3 Self-reliance: - Concept: Prioritizing the use of domestic resources over imports for economic development, emphasized in the initial seven five year plans. - Importance: Aimed at reducing dependency on foreign entities, particularly for food and technology, to safeguard national sovereignty and prevent foreign policy interference.
2.4 Equity: - Need: High growth and modernisation don't guarantee widespread prosperity; hence, ensuring the benefits of economic growth extend to the impoverished sections is crucial. - Implementation: Equity involves providing all citizens with their basic needs and reducing wealth disparity.
3. Evaluation of Plans (1950-1990):
  • Scope: The first seven five year plans focused on these goals to varying extents.
  • Sectors: Their success is assessable by reviewing developments in agriculture, industry, and trade during 1950-1990.
  • Post-1991 Policies: Policies and development issues post-1991 are discussed separately in Chapter 3.
2.3 Indian Agriculture
Context: Post-Colonial Indian Agriculture
  • Post-independence, India faced challenges in agricultural growth and equity due to colonial policies.
  • Independent India's policy makers initiated land reforms and promoted 'High Yielding Variety' (HYV) seeds to revolutionize agriculture.
Land Reforms
2.1. Intermediaries' Abolition - Pre-independence, agriculture was dominated by intermediaries like zamindars, who collected rent but didn't improve farming. - India's low productivity necessitated food imports, especially from the U.S.A. - Post-independence, reforms began to remove these intermediaries, enabling farmers to become landowners and potentially invest in improvements.
2.2. Land Ceiling Implementation - Land ceiling policies set a maximum limit on land ownership per individual to prevent ownership concentration. - Aimed to promote equity but faced various implementation challenges.
2.3. Outcomes of Land Reforms - Removal of intermediaries brought 200 lakh tenants into direct government contact, reducing exploitation and potentially increasing output. - However, equity was not fully achieved: some former zamindars exploited legal loopholes to retain large landholdings, and the poorest workers gained minimal benefits. - Land ceiling faced legal challenges and delays, with landlords using loopholes to bypass reforms.
2.4. Regional Variations - Land reforms were notably successful in Kerala and West Bengal due to government commitment. - Other states lacked this commitment, leading to persistent inequalities in land ownership.
3. Challenges in Implementation
  • Landowners circumvented reforms through legal challenges, delays, and loopholes.
  • Varied levels of state government commitment impacted the effectiveness of reforms.
4. Key Takeaways
  • Despite the noble intent behind land reforms and the promotion of HYV seeds, the realization of these policies faced significant obstacles.
  • Successes and failures varied significantly across different Indian states, primarily due to differences in implementation commitment.
  • Overall, while there were improvements in agriculture, the goal of absolute equity in land ownership remains unfulfilled
Green Revolution
1. Background: Agricultural Dependence
  • Post-independence, ~75% of India's population relied on agriculture.
  • Challenges included outdated technology, lack of infrastructure, and heavy dependence on monsoon due to limited irrigation.
2. The Green Revolution 2.1. Introduction and Impact - Marked by a significant increase in food grain production due to High Yielding Variety (HYV) seeds for crops, especially wheat and rice. - Required appropriate use of fertilizers, pesticides, and a consistent water supply. - Initially benefited affluent states (e.g., Punjab, Andhra Pradesh, Tamil Nadu) and primarily wheat-growing regions. - The second phase expanded HYV use to more states and crops, achieving national self-sufficiency in food grains.
2.2. Market Dynamics and Economic Implications - Importance of "marketed surplus" (portion of produce sold by farmers in the market). - Green Revolution led to a substantial marketed surplus, causing food grain prices to fall, benefiting low-income groups. - Government could procure and stockpile food grains for shortage periods.
3. Risks and Mitigation 3.1. Concerns - Potential for increased disparities, favoring big farmers with resources for required inputs. - Vulnerability of HYV crops to pest attacks, posing significant risks, especially for small farmers.
3.2. Government Intervention - Provided low-interest loans and subsidized fertilizers, making inputs accessible for small farmers. - Established research institutes for pest control, reducing risks related to pest attacks. - Ensured both small and large farmers benefited, preventing an increase in disparities.
4. Key Takeaways
  • The Green Revolution significantly boosted India's agricultural productivity and food self-sufficiency, though it initially favored regions and farmers with better resources.
  • Government interventions were crucial in extending benefits to smaller farmers and mitigating risks, highlighting the state's vital role in equitable agricultural development.
Debate over Subsidies
1. The Subsidies Debate
  • Context: Controversy surrounding the economic justification of agricultural subsidies.
1.1. Initial Necessity - Subsidies were essential initially to incentivize farmers, especially smallholders, to adopt new HYV (High Yielding Variety) technologies, considered risky at first.
1.2. Arguments for Phasing Out Subsidies - Some economists advocate for the discontinuation of subsidies post wide-scale profitable adoption. - Concerns: - Substantial part of subsidies benefits the fertilizer industry, not the intended farmers. - Predominantly aids farmers in more affluent regions. - Poses a significant financial burden on government resources.
1.3. Counterarguments for Continuing Subsidies - Advocates for continuation highlight: - Persistent risks in farming. - Poverty among farmers, preventing them from affording necessary inputs without subsidies. - Potential increase in inequality between affluent and poor farmers upon subsidy removal. - Suggest reforms to ensure subsidies accurately target and benefit poor farmers.
2. Agricultural Sector Post-1960s
  • Achievements: Self-sufficiency in food grains by the late 1960s, a notable milestone.
  • Challenges: High agricultural employment (around 65% of the population) persisted through 1990, despite a decreasing contribution of agriculture to GDP.
2.1. Economic Trends and Concerns - Prosperous nations usually see a decline in both GDP contribution and employment in agriculture. - In India, while agriculture's GDP contribution dropped from 1950 to 1990, employment remained high (67.5% to 64.9%).
2.2. Underlying Issues - Insufficient growth in the industrial and service sectors failed to absorb agricultural workers. - Marked as a significant policy failure during 1950-1990
 
2.4 Industry & Trade
Introduction
1. Importance of the Industrial Sector
  • Key to progression for poorer nations.
  • Benefits: Provides stable employment, drives modernization, and enhances overall prosperity.
  • Post-independence scenario: Limited to cotton textiles and jute with only a couple of significant iron and steel firms.
  • Objective: Expansion of the industrial base for economic growth.
2. Role of Public and Private Sectors
2.1. Dilemma Post-Independence - Concern: Indian industrialists lacked the capital for significant industrial investment and the market size was insufficient to stimulate such investments.
2.2. Government Intervention Rationale - Capital and market limitations necessitated substantial government role. - Socialist economic development approach influenced policy direction.
2.3. Strategy in Early Five Year Plans - Government to control the "commanding heights" of the economy, i.e., vital industries. - Private sector policies to complement and follow the lead of the public sector initiatives
Industrial Policy Resolution 1956 (IPR 1956)
1.1. Background - Aligned with the objective of state-controlled economy. - Basis for the Second Five-Year Plan aiming for a socialist society. 1.2. Industry Classification - Category I: Exclusive government ownership. - Category II: Private sector supplementation, with government initiating new units. - Category III: Entirely private sector, but regulated.
State Control and Licensing
2.1. Licensing System - Mandatory for new industries. - Used to foster industrial growth in backward regions. - License easier to acquire if unit established in an economically backward area. 2.2. Promotion of Regional Equality - Concessions for units in backward areas: tax benefits, lower electricity tariffs.
Regulations for Existing Industries
3.1. Expansion and Diversification - License required for increasing output or diversifying production. - Government regulation to match production with economic need.
Small-Scale Industry (SSI)
4.1. Definition and Investment - Defined concerning maximum investment on assets. - 1950: Investment cap at rupees five lakh; Now: cap is rupees one crore. 4.2. Role in Rural Development - Identified by the Karve Committee in 1955. - More labor-intensive, thus promising higher employment. 4.3. Challenges and Support - Inability to compete with larger firms. - Government measures for protection: - Production of certain items reserved for SSIs. - Concessions: lower excise duty, bank loans with reduced interest rates
2.5 Trade Policy - Import Substitution and Effects on Industrial Development
  1. Trade Policy: Import Substitution 1.1. Inward Looking Strategy - Prevailed in the first seven plans. - Known as import substitution. 1.2. Goal - Replace imports with domestic production (e.g., vehicles). - Protect domestic industries from foreign competition through tariffs and quotas.
  1. Protection Measures 2.1. Tariffs and Quotas - Tariffs: Taxes on imported goods to discourage their use. - Quotas: Limit on the quantity of goods that can be imported. 2.2. Rationale - Developing country industries unable to compete with developed economies. - Protection assumed necessary for domestic industries to grow and eventually compete.
  1. Effects of Protectionist Policies 3.1. Industrial Development - Significant GDP contribution increase from industrial sector (13% in 1950-51 to 24.6% in 1990-91). - Diversification of industries beyond cotton textiles and jute by 1990, largely public sector-driven. - Small-scale industries promotion: more opportunities, even for those with less capital. - Development of indigenous industries in electronics, automobile sectors due to protection. 3.2. Criticism and Shortcomings - Continuation of public sector in non-essential areas (e.g., telecommunication, bread manufacturing). - Monopoly leading to inefficiencies (e.g., long wait for telephone connections). - Misuse of licensing system by big industrial houses to prevent competition. - Protection from foreign competition led to complacency among domestic producers, lack of incentive to improve quality. 3.3. Public vs. Private Sector Debate - Public sector firms often incurred losses but continued due to government backing. - Debate over the role of public sector: welfare vs. profit. - Protectionism debate: should continue if rich nations do the same or not. 3.4. Call for Policy Change - Due to these conflicts and inefficiencies, a shift in economic policy was advocated. - Led to the introduction of a new economic policy in 1991
2.6 Conclusion: Indian Economy (1950-1990) and the Need for Reform
  1. Economic Progress Overview 1.1. Industrial Diversification - Substantial expansion compared to the pre-independence era. 1.2. Self-sufficiency in Food - Achieved largely due to the Green Revolution. 1.3. Land Reforms - Abolition of the zamindari system.
  1. Challenges and Criticisms 2.1. Public Sector Performance - Dissatisfaction among economists over many public sector enterprises' efficacy. 2.2. Excessive Government Regulation - Stifled the growth of entrepreneurship. 2.3. Protectionism and Quality of Goods - Protection against foreign competition reduced the incentive for Indian producers to improve quality. 2.4. Inward-oriented Policies - Hindered the development of a robust export sector.
  1. Need for Economic Policy Reform 3.1. Global Economic Scenario - Changing global conditions underscored the need for policy reform. 3.2. Introduction of New Economic Policy in 1991 - Aimed at enhancing efficiency and competitiveness of the Indian economy. 3.3. Next Chapter's Focus - Explores the new economic policy and its implications in further detail
 
Unit 2 - Economic Reforms Since 1991
Chapter 3 - Liberalisation, Privatisation, Globalisation - An Appraisal
Introduction & Background
1. Introduction 1.1 Post-independence, India adopted a mixed economy, blending features of capitalist and socialist systems. 1.2 Criticisms suggest that the regulatory framework hindered growth, while others highlight achievements like increased savings, diverse industries, and agricultural growth. 1.3 The 1991 crisis, marked by inability to repay external debt and depleting foreign reserves, led to significant economic reforms.
2. Background of the 1991 Crisis 2.1 The crisis originated due to inefficient economic management in the 1980s. 2.2 Government expenditures exceeded revenues, leading to borrowing from various sources, including international institutions. 2.3 Development policies necessitated high spending, but revenues, particularly from taxation and public sector undertakings, were low. 2.4 Excessive spending, low attention to exports, and inadequate foreign exchange reserves led to a financial crunch by the late 1980s. 2.5 Sharp price rises, unbalanced growth of imports versus exports, and insufficient foreign reserves exacerbated the situation, making borrowing unsustainable.
3. Crisis Management and Introduction of New Economic Policy (NEP) 3.1 India procured a $7 billion loan from the World Bank and IMF to manage the crisis, agreeing to conditions requiring economic liberalization. 3.2 The NEP introduced aimed at creating a competitive environment, eliminating barriers for firms, and was divided into stabilisation measures and structural reforms. 3.2.1 Stabilisation Measures: Short-term strategies to rectify payment imbalances and control inflation, involving maintaining adequate foreign reserves and managing price rises. 3.2.2 Structural Reforms: Long-term strategies aiming to enhance economic efficiency and global competitiveness by removing economic rigidities. 3.3 The reform policies were categorized under liberalisation, privatisation, and globalisation, significantly redirecting India's developmental strategies.
Key Terms:
  • Mixed Economy: An economic system combining private and public enterprise.
  • Foreign Exchange Reserves: Assets held on reserve by a central bank in foreign currencies.
  • Liberalisation: The removal or loosening of restrictions on something, typically an economic or political system.
  • Privatisation: The transfer of a business, industry, or service from public to private ownership and control.
  • Globalisation: The process by which businesses or other organizations develop international influence or start operating on an international scale.
  • Stabilisation Measures: Policies implemented to stabilize an economy, for instance, controlling inflation and maintaining sufficient foreign exchange reserves.
  • Structural Reforms: Long-term policies aimed at altering the structure of an economy, enhancing its efficiency, and increasing its global competitiveness.
Liberalisation
Introduction
  • Liberalisation initiated to eliminate regulations that impeded economic growth.
  • Early measures in the 1980s, but significant reforms began in 1991.
  • Focus on industrial sector, financial sector, tax reforms, foreign exchange, and trade and investment.
Deregulation of Industrial Sector
  • Pre-1991: Strict regulatory mechanisms. Included mandatory industrial licensing, restricted entry to certain industries, small-scale industry reservations, and price controls.
  • Post-1991 Reforms:
    • Industrial licensing significantly curtailed, remaining for only a few sectors like alcohol, cigarettes, hazardous chemicals, explosives, electronics, aerospace, drugs, and pharmaceuticals.
    • Reduced public sector exclusivity, confining to atomic energy and certain railway operations.
    • Small-scale industry de-reservation, permitting more products to be manufactured by all sectors.
    • Introduced market-determined pricing in most industries, reducing government control over price fixation.
Financial Sector ReformS
Overview
  • The financial sector encompasses various institutions including commercial and investment banks, stock exchanges, and the foreign exchange market.
  • Traditionally regulated by the Reserve Bank of India (RBI), which oversees norms and regulations impacting all facets of the sector.
Aims of Reforms:
  • Transition the role of the RBI from a strict regulator to a facilitator, providing greater autonomy to financial institutions.
  • Foster a more competitive, efficient, and diversified financial environment.
Major Changes:
  1. Introduction of Private and Foreign Banks:
      • Establishment of private sector banks, both Indian and foreign, injecting competition and efficiency.
      • Foreign investment cap in banks increased to approximately 74%, inviting more foreign capital and expertise.
  1. Operational Autonomy to Banks:
      • Banks meeting specific criteria granted the liberty to open new branches and rationalize their networks without prior RBI approval, enhancing operational flexibility.
      • Despite increased autonomy, the RBI retains oversight over certain managerial practices to protect account-holders and maintain systemic stability.
  1. International Investment:
      • Entry of Foreign Institutional Investors (FIIs) like merchant banks, mutual funds, and pension funds into Indian markets, broadening investment sources and providing additional capital liquidity.
Tax Reforms in India
Background:
  • Tax reforms relate to changes in the government's taxation and public expenditure strategies, known collectively as fiscal policy.
  • Taxes are categorized into two main types: direct taxes (on income and corporate profits) and indirect taxes (on goods and services).
Objectives of Tax Reforms:
  1. Reduce Tax Evasion: High taxation rates were identified as a primary cause of tax evasion. Reducing these rates was seen as a method to encourage compliance and honesty among taxpayers.
  1. Stimulate Savings and Investment: Moderate tax rates on individual incomes are believed to incentivize savings and prompt individuals to disclose their incomes voluntarily.
  1. Boost Economic Activity: Lower corporate tax rates aim to encourage business investment, expansion, and economic dynamism.
  1. Simplify Tax Structure: Streamlining both direct and indirect tax structures to make them more understandable, thus promoting better compliance.
Key Reforms:
  1. Reduction in Direct Taxes:
      • Continuous reduction in individual income tax rates since 1991.
      • Gradual lowering of corporate tax rates to stimulate business growth and investment.
  1. Reformation of Indirect Taxes:
      • Efforts to create a unified national market with a standard tax structure across states and sectors.
  1. Introduction of Goods and Services Tax (GST):
      • The GST Act of 2016, effective from July 2017, introduced a unified indirect tax system.
      • Replaced a multitude of previous taxes, aiming to simplify the tax-paying process, increase government revenue, and reduce tax evasion.
      • Conceptualized as ‘one nation, one tax, one market,’ GST is expected to bolster economic unity and efficiency.
  1. Simplification and Compliance:
      • Tax procedures have been simplified, and rates have been substantially reduced to promote compliance.
      • Streamlining the process reduces the burden on taxpayers and encourages timely and honest tax submissions
Foreign Exchange Reforms
Background:
  • The 1991 economic crisis, primarily a balance of payments problem, necessitated immediate reforms in India's foreign exchange system.
Key Measures:
  1. Devaluation of the Rupee:
      • The Indian government initiated a two-step downward adjustment in the rupee value, aiming to enhance the competitiveness of Indian exports.
      • Objectives were to increase the inflow of foreign exchange and reduce the trade deficit.
  1. Market Determination:
      • Transitioned from a government-controlled exchange rate to a market-determined system (Managed float system).
      • This shift allowed currency value to be set by market forces, reflecting the true demand and supply of foreign exchange.
Impact:
  • Enhanced export competitiveness, increased foreign exchange reserves, and stabilized the economic crisis.
Trade and Investment Policy Reforms
Background:
  • Pre-1991, India had a highly regulated trade environment, characterized by high tariffs and extensive quantitative restrictions (QRs) on imports.
Objectives:
  • Increase global competitiveness, attract foreign investment, improve efficiency, and adopt advanced technologies.
Key Reforms:
  1. Dismantling QRs:
      • QRs on imports and exports were largely eliminated.
      • This was a significant step away from protectionism, opening up the economy to global competition.
  1. Tariff Reductions:
      • High import tariffs were systematically reduced, making imports cheaper.
      • Aimed to integrate the Indian economy with global markets and expose domestic industries to foreign competition.
  1. Liberalizing Investment:
      • Procedures for foreign investment were simplified.
      • Foreign direct investment (FDI) was actively sought in various sectors.
  1. Import Licensing Removal:
      • Except for certain sensitive items, import licensing was largely abolished.
      • Allowed for the free flow of goods, particularly consumer goods and technology.
  1. Boosting Exports:
      • Export duties were removed or minimized to make Indian goods more competitive internationally.
Impacts:
  • Enhanced the efficiency and global competitiveness of India's industries.
  • Attracted foreign investment, bringing in new technologies and boosting economic growth.
  • Increased consumer choice and pushed domestic industries to innovate and improve quality.
Privatization
Privatization Defined:
  • Privatization refers to the transfer of ownership and/or management of a government-owned enterprise to the private sector. This is a significant shift because it represents a move away from government control and operation of services or industries towards an economy where private ownership and market mechanisms determine the allocation of resources.
Methods of Privatization:
  1. Partial or Full Disinvestment:
      • The government reduces its stake in a Public Sector Enterprise (PSE) by selling a portion of its equity to private investors. This can range from a partial sale (where the government retains a majority stake) to a complete sale where the enterprise becomes fully private.
      • Disinvestment is often the term used when the government is selling its shares in PSUs to private entities or the public.
  1. Management Buyouts:
      • In some cases, the government has allowed the public sector company's management to buy and run it, thereby making it a private entity.
Rationale Behind Privatization:
  1. Efficiency Improvements:
      • It's believed that private companies operate more efficiently due to better management practices and profit incentives. Privatization is expected to lead to cost-cutting, higher productivity, and improved services.
  1. Financial Discipline:
      • With privatization, companies are expected to follow strict financial discipline to survive in the competitive market, which is thought to lead to better resource management and service delivery.
  1. Modernization and Development:
      • Privatization is seen as a way to facilitate modernization, as private enterprises are often more invested in adopting new technologies and innovations to stay competitive.
  1. Attracting Foreign Direct Investment (FDI):
      • By opening up to private ownership, there's an expectation of increased foreign investment, which could provide a significant boost to the economy.
  1. Reducing Fiscal Burden:
      • Some PSEs which are not profitable put a financial strain on the government's resources. By privatizing these, the government can reduce its fiscal burden.
Autonomy to PSUs:
  • In a bid to improve efficiency without full privatization, the government has granted greater autonomy to certain PSUs, categorizing them as 'Maharatnas,' 'Navratnas,' and 'Miniratnas.'
    • These titles indicate the level of autonomy the companies have in decision-making.
    • The categorization is based on various criteria such as the company's profitability, net worth, and global presence.
    • With this autonomy, PSUs are expected to make decisions more efficiently and operate in a more market-oriented manner.
Globalisation
  1. Definition and Complexity
      • Integration of a country's economy with the world economy.
      • Not just economic; encompasses social, geographical aspects.
      • Results from policies promoting interdependence and integration.
      • Creates networks transcending traditional boundaries.
      • Influences local events through global happenings.
  1. Outsourcing
      • A significant outcome of globalisation.
      • Companies hire services from external sources, often from other countries.
        • Services include legal advice, computer service, advertisement, security, etc.
      • Intensified due to advancements in communication and IT.
      • Types of outsourced services:
        • BPO (Business Process Outsourcing) or call centres
        • Record keeping
        • Accountancy
        • Banking services
        • Music recording
        • Film editing
        • Book transcription
        • Clinical advice
        • Teaching
      • Real-time data transmission enabled by modern telecommunication and the Internet.
      • India: a prime destination due to low wage rates and skilled manpower.
  1. World Trade Organisation (WTO)
      • Established in 1995, succeeding General Agreement on Trade and Tariff (GATT).
      • GATT: Founded in 1948, involving 23 countries.
      • Objective:
        • Administer multilateral trade agreements.
        • Equal trading opportunities for all countries.
        • Establish a rule-based trading regime.
      • Functions:
        • Prevents arbitrary trade restrictions.
        • Expands production and trade of services.
        • Ensures optimal use of global resources.
        • Environmental protection.
      • Agreements cover trade in goods and services.
        • Facilitates trade by removing tariff and non-tariff barriers.
        • Provides greater market access to members.
  1. India and the WTO
      • Active member since inception.
      • Advocates for the interests of developing countries.
      • Committed to trade liberalisation.
        • Removal of quantitative import restrictions.
        • Reduction of tariff rates.
      • Criticism/Controversy:
        • Major trade volume still within developed nations.
        • Developed nations' agricultural subsidies cause disputes.
        • Developing countries face market access issues.
  1. Critical Thinking
      • Is WTO membership beneficial for India?
      • Issues: Developed vs. developing countries' market access.
      • Agricultural subsidies: A point of contention.
      • Consider the balance of rights and commitments.
Indian Economy During Reform : An Assessment
Introduction
  • Reform process initiated three decades ago.
  • Assessment based on economic performance post-reforms.
  1. Gross Domestic Product (GDP) Growth
      • Economic growth measured by GDP.
      • Post-1991: significant GDP growth.
        • 1980-91: 5.6%
        • 2007-12: 8.2%
      • Growth driven primarily by the service sector.
  1. Sectoral Performance
      • Agriculture:
        • Decline in growth.
        • High growth in 2013-14 but negative in the following year.
      • Industry:
        • Fluctuating growth.
        • Steep decline in 2012-13 but positive growth in subsequent years.
      • Service:
        • Increased growth, surpassing overall GDP growth.
        • High growth rate of 9.8% in 2014-15.
  1. Foreign Investments and Reserves
      • Post-reforms: surge in foreign direct investment (FDI) and foreign institutional investment (FII).
        • 1990-91: ~US $100 million
        • 2017-18: US $30 billion
      • Foreign exchange reserves boosted significantly.
        • 1990-91: US $6 billion
        • 2018-19: US $413 billion
      • India: Among the largest foreign exchange reserve holders globally.
  1. Exports and Price Stability
      • Post-1991: Emerged as a robust exporter.
        • Auto parts, pharmaceuticals, engineering goods, IT software, textiles.
      • Effective control over rising prices.
  1. Criticism of the Reform Process
      • Despite successes, faced criticism for:
        • Inadequate employment generation.
        • Neglect of the agricultural sector.
        • Insufficient industrial growth.
        • Lack of infrastructure development.
        • Poor fiscal management
Growth and Employment
  1. Post-Reform GDP Growth:
      • GDP growth rate increased post-reforms.
      • Issue: Growth hasn't translated into sufficient employment opportunities.
      • Upcoming Studies: Connection between employment aspects and growth.
Reforms in Agriculture
  1. General Impact:
      • Reforms haven't significantly benefited the agricultural sector.
      • Notable deceleration in growth rate observed.
  1. Public Investment:
      • Decline since 1991, particularly in infrastructure (irrigation, power, roads, market linkages, research, and extension).
      • Crucial for Green Revolution success.
  1. Fertiliser Subsidy:
      • Partial removal resulted in increased production costs.
      • Severe effects on small and marginal farmers.
  1. Policy Changes:
      • Reduction in import duties on agricultural products.
      • Low minimum support prices.
      • Removal of quantitative restrictions on imports.
      • Negative Effects: Increased international competition, hurting local farmers.
  1. Export-Oriented Strategies:
      • Shift towards cash crops production for export instead of domestic food grains.
      • Consequence: Pressure on food grains' prices.
Reforms in Industry
  1. Industrial Growth Slowdown:
      • Due to reduced demand because of factors like cheaper imports and inadequate infrastructure investment.
  1. Globalisation Effects:
      • Compelled openness of economy in developing countries.
      • Industries vulnerable to cheaper imports, replacing demand for local goods.
      • Inadequate infrastructure due to insufficient investment.
      • Seen as a threat to local industries and employment.
  1. Market Access Issues:
      • Developing countries facing high non-tariff barriers from developed economies.
      • Example: USA's continuing quota restriction on textile imports from India and China.
Disinvestment in PSEs (Public Sector Enterprises)
  1. Annual Targets:
      • Example: 1991-92 target was Rs 2500 crore, achieved Rs 3,040 crore.
      • 2017-18: Target was about Rs 1,00,000 crore, achieved ` 1,00,057 crore.
  1. Criticism:
      • Undervaluation of PSE assets.
      • Sold to private sectors, leading to government loss.
      • Proceeds used to offset revenue shortages, not for PSE development or social infrastructure.
  1. Efficiency Debate:
      • Question: Is selling government company properties the optimal strategy for efficiency?
Reforms and Fiscal Policies
  1. Public Expenditure:
      • Reforms have restricted growth, especially in social sectors.
  1. Tax Reductions:
      • Aimed at increasing revenue and reducing evasion.
      • Outcome: No significant boost in tax revenue.
  1. Tariff and Tax Incentives:
      • Reform policies reduced tariffs, limiting revenue from custom duties.
      • Tax incentives for foreign investors, reducing further the potential for tax revenues.
      • Impact: Negative effect on developmental and welfare expenditures.
Conclusion
  1. Dual Impact:
      • Globalisation, via liberalisation and privatisation, has yielded both positive and negative outcomes for India and other nations.
  1. Supporting Views:
      • Opportunity Perspective:
        • Greater access to global markets.
        • Acquisition of advanced technology.
        • Potential for large industries in developing nations to gain international prominence.
      • Criticism:
        • Perceived as a strategy by developed nations to infiltrate other markets.
        • Compromises welfare and identity of individuals in less affluent countries.
        • Market-driven globalisation exacerbates economic disparities between nations and individuals.
  1. Indian Context:
      • 1990s Crisis and Inequalities:
        • Crisis stemmed from ingrained inequalities in Indian society.
        • Economic reforms, prompted by the crisis and externally advised, intensified these inequalities.
      • Disproportionate Growth:
        • Economic uplift observed primarily among high-income groups.
        • Enhanced income and consumption quality not widespread but concentrated.
      • Sectoral Growth Disparity:
        • Growth predominantly in service sectors: telecommunication, IT, finance, entertainment, travel, hospitality, real estate, and trade.
        • Critical sectors like agriculture and industry, employing millions, largely neglected
Unit 3 - Current Challenges Facing the Indian Economy
Chapter 4 - Human Capital Formation in India
Physical v/s Human Capital
Key Aspect
Physical Capital
Human Capital
Definition
Economic and technical assets used in production (e.g., machinery, buildings).
Knowledge, skills, and health that individuals acquire (e.g., education, training).
Formation
Result of conscious investment decisions based on expected returns.
Influenced by societal factors and personal decisions; education and health are key.
Ownership
Tangible, can be owned by individuals or entities.
Intangible, inherent in individuals.
Presence
Can be used without the owner's physical presence.
Requires the person's presence for application.
Market Nature
Can be sold as a commodity in the market.
Not sold; only the services are offered in the market.
Mobility
High mobility, can move across countries barring trade restrictions.
Limited mobility due to cultural, national, and linguistic barriers.
Depreciation
Occurs through wear and tear and technological obsolescence.
Occurs with aging but can be mitigated through continuous education, health investment, and adaptability to technology.
Benefits
Generates private benefits, accruing to the owners or those who pay for the services.
Creates both private and social (external) benefits. Contributes to socio-economic progress, effective democracy, public health.
4.1 Introduction
  1. Key Factor in Human Evolution:
      • Ability to store and transmit knowledge via conversation, songs, lectures, etc.
  1. Need for Education and Skill:
      • Enhances efficiency and skill in tasks.
      • Educated individuals contribute more to the economy due to higher earning capacity.
  1. Benefits of Education:
      • Beyond income: social standing, pride, better life choices, understanding societal changes, stimulating innovations.
      • Facilitates the adaptation of new technologies.
      • Accelerates national development.
4.2 What is Human Capital
  1. Understanding Human Capital:
      • Transformation of human resources into valuable assets (e.g., farmers into engineers).
      • Requirement of existing human capital to produce more (professors educate students to become professionals).
      • Investment in human capital is essential for further creation.
  1. Exploring Human Capital:
      • (i) Sources of Human Capital: Education, training, healthcare, etc.
      • (ii) Relation to Economic Growth: Direct correlation; more human capital typically leads to economic prosperity.
      • (iii) Link to Human Development: Yes; encompasses physical, mental, and social well-being.
      • (iv) Government's Role in India: Policy-making, funding, creating educational and health infrastructure, etc.
Key Takeaways for Revision:
  • Human evolution significantly driven by knowledge transmission.
  • Education boosts economic contribution and personal development.
  • Human capital involves transforming human resources into skilled professionals through education, training, etc.
  • Investment in human capital is crucial for generating more skilled resources.
  • Government plays a pivotal role in facilitating human capital formation.
4.3 Sources of Human Capital
1. Introduction to Human Capital:
  • Human capital refers to the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.
2. Main Sources of Human Capital:
  1. Education:
      • Primary method of acquiring skills and knowledge.
      • Individuals invest in education to enhance future income, similar to how companies buy capital goods to increase future profits.
  1. Health:
      • Vital for individual and national development.
      • Investment in health increases the supply of a healthy workforce.
      • Forms of health investments:
        • Preventive medicine.
        • Curative medicine.
        • Social medicine.
        • Provision of clean water and sanitation.
  1. On-the-Job Training:
      • Firms provide training to improve worker skills.
      • Methods:
        • In-house training.
        • Off-campus training.
      • Expected to increase productivity and, therefore, future profits.
  1. Migration:
      • Individuals migrate for better job opportunities and higher salaries.
      • Costs include transportation, higher living costs, and psychic costs due to cultural adjustments.
      • The potential for increased earnings makes migration a human capital investment.
  1. Information Acquisition:
      • Information related to labor, education, and health markets is valuable.
      • Helps in making informed decisions about human capital investments.
      • Costs associated with acquiring this information are considered an investment in human capital.
3. Comparison Between Physical and Human Capital:
  • While both are investments aimed at increasing future profits, there are distinct differences (refer to Box 4.1 for detailed comparisons).
4. Human Capital Formation in India:
  • Contextual reference highlighting the dynamics of human capital in India, particularly migration patterns and the quest for better employment opportunities
4.3 Human Capital & Economic Growth
1. Human Capital and Economic Growth:
  • 1.1 Definition: Economic growth refers to the increase in a country's real national income.
  • 1.2 Key Contributors:
    • 1.2.1 Educated vs. Uneducated Workers: Educated individuals generally contribute more to economic growth due to higher labor skills and income generation.
    • 1.2.2 Health Factor: Healthy individuals can provide a consistent labor supply for longer periods, positively impacting economic growth.
2. Components of Human Capital:
  • 2.1 Education: Facilitates understanding societal changes, scientific advancements, and stimulates inventions/innovations.
  • 2.2 Health: Contributes to the consistency and longevity of the labor supply.
  • 2.3 Other Factors: On-the-job training, job market information, and migration.
3. Human Capital and Labour Productivity:
  • 3.1 Influence: Enhances human productivity, stimulates innovations, and creates the ability to adopt new technologies.
  • 3.2 Educated Labour Force: Critical for adapting to technological changes.
4. Empirical Evidence:
  • 4.1 Measurement Challenges: Education and health services indicators may not accurately reflect the true status of human capital.
  • 4.2 Convergence Dilemma: Despite faster human capital growth in developing countries, per capita real income growth isn’t as rapid.
5. Bidirectional Causality:
  • 5.1 Income and Human Capital: Higher income can lead to improved human capital, and vice versa.
6. India’s Perspective:
  • 6.1 Policy Recognition: Human resource development recognized as crucial in economic growth strategies.
  • 6.2 Simultaneous Sector Growth: Education, health, and economic sectors reinforce each other's growth.
7. National Education Policy 2020:
  • 7.1 Global Changes: Rapid advancements in technology and shifts in environmental conditions.
  • 7.2 Emerging Needs:
    • 7.2.1 Skilled Workforce: Increasing demand in fields like mathematics, computer science, data science, and multidisciplinary sciences.
    • 7.2.2 Environmental Challenges: Need for skills in biology, chemistry, physics, agriculture, and climate science due to resource challenges.
    • 7.2.3 Health Threats: Importance of collaborative research in disease management and vaccine development.
  • 7.3 Future Demand: Anticipated growth in demand for humanities and arts as India progresses economically.
  • 7.4 Vision: Human capital formation is crucial for transitioning India to a knowledge-based economy.
4.4 Human Capital and Human Development
  • 4.1 Distinction:
    • Human capital focuses on education and health as tools for increasing labor productivity.
    • Human development sees these aspects as intrinsic to human well-being, beyond just economic productivity.
  • 4.2 Perspectives:
    • Human Capital:
      • Emphasizes return on investment through improved productivity.
    • Human Development:
      • Advocates for the inherent right to basic education and health, regardless of the economic outcome.
  • 4.3 Right to Basic Needs:
    • Every individual has the right to literacy and a healthy life, inherent to their dignity and not just their economic value.
4.5 State of Human Capital Formation in India
1. Overview of Human Capital Formation in India:
  • 1.1 Definition:
      • Human capital formation is the process of increasing the knowledge, skills, and capacities of people in a country through investments in education, health, job training, migration, and information.
  • 1.2 Importance of Education and Health:
      • These are crucial for human capital formation as they contribute significantly to a person's productivity and well-being
  • 1.3 Government Role:
      • Given the long-term impact and the necessity for standard quality, government intervention is essential in these sectors.
2. Structure of Education and Health Governance in India:
  • 2.1 Federal Structure:
      • India has a three-tier government system - union, state, and local - all sharing responsibilities for education and health.
  • 2.2 Education Sector:
      • Managed by ministries of education, departments of education, and organizations like NCERT, UGC, and AICTE.
  • 2.3 Health Sector:
      • Overseen by ministries of health, departments of health, and bodies like the National Medical Commission and ICMR.
3. Challenges in Access and Affordability:
  • 3.1 Economic Disparities:
      • A significant portion of the population, especially those below the poverty line, cannot afford basic education and health services.
  • 3.2 Government's Response:
      • Efforts are being made to provide free or affordable services, aiming for universal literacy and improved health care, especially for the underprivileged.
4.6 Education Sector in India
notion image
1. Government Expenditure on Education:
  • 1.1 Measurement Metrics:
    • Expressed as a percentage of 'total government expenditure' and as a percentage of Gross Domestic Product (GDP).
  • 1.2 Trends (1952-2014):
    • Education expenditure increased from 7.92% to 15.7% of total government expenditure, and from 0.64% to 4.13% of GDP.
    • The increase was not uniform, with periods of irregular rises and falls.
    • Private expenditure by individuals and philanthropic institutions would increase total education expenditure significantly.
2. Allocation of Education Expenditure:
  • 2.1 Elementary vs. Tertiary Education:
    • Elementary education commands a major share, but 'expenditure per student' is higher in tertiary education.
    • Despite higher costs, funds shouldn't be transferred from tertiary to elementary education; both are vital.
  • 2.2 Disparities Among States (2014-15):
    • Considerable differences in per capita public expenditure on elementary education across states (e.g., Rs 34,651 in Himachal Pradesh vs. Rs 4,088 in Bihar).
    • Leads to varying educational opportunities and outcomes.
3. Desired vs. Actual Expenditure:
  • 3.1 Recommendations:
    • The Education Commission (1964–66) suggested allocating at least 6% of GDP to education.
    • The Tapas Majumdar Committee (1999) estimated a need of Rs 1.37 lakh crore over 10 years to universalize school education for ages 6-14.
  • 3.2 Shortfalls:
    • Current expenditure of just over 4% of GDP is insufficient compared to the recommended 6%.
    • Goal accepted but not yet met.
4. Government Initiatives:
  • 4.1 Right to Education Act (2009):
    • Free and compulsory education as a fundamental right for children aged 6-14.
  • 4.2 Education Cess:
    • A 2% education cess on union taxes, dedicated to elementary education funding.
  • 4.3 Investment in Higher Education:
    • Significant outlay for higher education promotion and student loan schemes.
5. Indicators of Educational Achievements:
  • 5.1 Metrics:
    • Adult literacy level, primary education completion rate, and youth literacy rate.
  • 5.2 Progress:
    • Refer to Table 4.2 (not provided here) for detailed statistics over the last two decades
4.7 Future Prospects
1. Education for All:
1.1 Current Reality:
  • Despite increased literacy rates, the absolute number of illiterates remains high, equating to India's population at independence.
1.2 Constitutional Directive (1950):
  • Aimed for free, compulsory education for children under 14 within ten years. Goal unmet; 100% literacy remains distant.
2. Gender Equity in Education:
2.1 Progress:
  • Narrowing gender disparities in literacy rates, a positive trend.
2.2 Continuing Challenges:
  • Essential to further promote women's education for economic, social benefits, and impacts on fertility rates and health.
  • Despite improvements, achieving 100% adult literacy, especially among women, requires sustained effort.
3. Higher Education Dynamics:
3.1 Education Pyramid:
  • Steep decrease in populace reaching higher education levels.
3.2 Unemployment Concerns (2011-12, 2017-18):
  • High unemployment rates among educated youth, especially rural female graduates (30% unemployment).
  • Lower unemployment (3-6%) among youth with only primary education.
  • Situation persists per Periodic Labour Force Survey 2017-18.
4. Imperatives for Improvement:
4.1 Government Role:
  • Increase allocation for and enhance standards of higher education institutions.
  • Focus on imparting employable skills to reduce educated unemployment.
4.2 Unemployment Paradox:
  • Higher education correlates with higher unemployment due to various factors:
    • Mismatch between educational outcomes, market demands.
    • Oversaturation in certain degree fields.
    • Insufficient vocational training and skill development.
    • Structural issues in the economy and job market.
5. Questions for Reflection:
  • Why does higher education not equate to lower unemployment in India?
    • Factors include education-job market disconnect, lack of practical skills training, and broader economic constraints.
Chapter 5 - Rural Development
Introduction
1.1. Context: Previously discussed challenges of poverty in India, notably prevalent in rural sectors lacking basic necessities. 1.2. Agriculture's Role: Primary livelihood source in rural areas. 1.3. Gandhi's View: Emphasised village development as central to India's overall progress. 1.4. Modern Relevance: Despite urban industrial growth, rural development remains crucial due to agriculture's significant role in supporting the Indian population. 1.5. Concern: Over two-thirds of the population relies on agriculture, which doesn't sufficiently support them; one-fourth of rural India faces extreme poverty.
What is Rural Development
Understanding Rural Development 2.1. Definition: Broad term, refers to advancing underdeveloped aspects of the village economy. 2.2. Focus Areas: - 2.2.1. Human Resource Development: Education (emphasis on female literacy and skill development) and health (sanitation and public health). - 2.2.2. Land Reforms: Redistribution and proper use of land. - 2.2.3. Productive Resource Development: Specific to each locality. - 2.2.4. Infrastructure: Electricity, irrigation, credit, marketing, transport (village roads, feeder roads), agricultural research/extension, and information spread. - 2.2.5. Poverty Alleviation: Improved living conditions and productive employment for the weaker sections.
2.3. Goals: - Enhance productivity in both farm and non-farm activities. - Diversification into non-farm activities (e.g., food processing). - Improve access to healthcare, sanitation, and education.
3. Challenges in Agriculture and Rural Development 3.1. Post-Reform Period: Post-1991, agriculture's contribution to GDP declined, yet dependency didn't decrease significantly. 3.2. Growth Rate Decline: Agricultural sector growth fell to around 3% per annum between 1991-2012, further declining during 2014-15. 3.3. Identified Causes: - 3.3.1. Reduced public investment post-1991. - 3.3.2. Inadequate infrastructure. - 3.3.3. Few alternate employment opportunities outside agriculture. - 3.3.4. Rising casualisation of employment. 3.4. Consequences: Visible distress among farmers across India.
4. Critical Aspects of Rural India 4.1. Credit and Marketing Systems: Requires in-depth analysis and reform. 4.2. Agricultural Diversification: Needed for sustainability and economic stability. 4.3. Organic Farming: Plays a role in sustainable development and ecological balance.
Conclusion:
  • Rural development is multifaceted, demanding attention not just to agricultural productivity but also human resource and infrastructure development.
  • Despite the growth of urban centers, rural India's development is paramount due to its direct impact on a significant portion of the population.
  • Addressing the challenges in rural development necessitates a holistic approach, encompassing education, health, employment, and sustainable practices.
Credit & Marketting in Rural Areas
5.1. Importance of Credit in Rural Economy
  • 5.1.1. Capital Infusion: Essential for higher productivity in agricultural and non-agricultural sectors.
  • 5.1.2. Time Gestation: Long intervals between sowing and income realisation necessitate borrowing for seeds, fertilisers, equipment, and personal expenses (e.g., ceremonies, family needs).
5.2. Historical Exploitation
  • 5.2.1. Post-Independence: Moneylenders/traders exploited farmers and labourers via high interest rates and manipulated accounts, leading to debt traps.
5.3. Evolution of Rural Credit System
  • 5.3.1. 1969 Reforms: Introduction of social banking and multi-agency approach for adequate rural credit.
  • 5.3.2. NABARD: Established in 1982 to coordinate rural financing.
  • 5.3.3. Green Revolution's Impact: Diversified rural credit with production-oriented lending focus.
5.4. Contemporary Rural Banking Structure
  • 5.4.1. Multi-Agency Institutions: Comprise commercial banks, RRBs, cooperatives, and land development banks.
  • 5.4.2. Expectation: Provide sufficient, affordable credit.
5.5. Emergence of Self-Help Groups (SHGs)
  • 5.5.1. Reason: Formal credit systems were inadequate/lacked integration into rural development.
  • 5.5.2. Operation: Promote thrift via small contributions; pooled funds used for loans to members at reasonable rates.
  • 5.5.3. Impact by 2019: Approximately 6 crore women involved in 54 lakh SHGs.
  • 5.5.4. Funding: 10-15,000 per SHG plus 2.5 lakhs per SHG as CISF for self-employment initiatives.
  • 5.5.5. Micro-Credit: SHGs known for micro-credit provisions.
  • 5.5.6. Women's Empowerment: Significant role of SHGs.
5.6. Criticism and Concerns
  • 5.6.1. Limited Productive Investment: Borrowings largely used for consumption rather than productive purposes.
  • 5.6.2. Key Question: Why isn't borrowing primarily utilized for productive purposes?
Conclusion:
  • The rural credit system in India has evolved significantly, from exploitation by moneylenders to the establishment of SHGs.
  • SHGs represent a significant stride toward women's empowerment and community support, despite criticisms.
  • Persistent challenges include the underutilization of borrowings for productive purposes, necessitating further inquiry and strategy adjustment.
Rural Banking a Critical Appraisal
1. Positive Impacts of Rural Banking Expansion:
  • 1.1 Boost in Rural Output: Expansion aided farm and non-farm output, income, and employment.
  • 1.2 Support for Green Revolution: Provided critical services, credit, and loans for production needs.
  • 1.3 Eradication of Famines: Transitioned from famine-stricken to food-secure, evident from significant grain reserves.
2. Current Challenges in Rural Banking:
  • 2.1 Inadequate Deposit Culture: Except for commercial banks, others struggle with deposit mobilization.
  • 2.2 High Loan Default Rates: Chronic issue with agriculture loan repayments.
    • 2.2.1 Alleged Willful Defaults: Claims of farmers intentionally not repaying loans.
3. Setbacks in Expansion and Promotion:
  • 3.1 Post-Reform Struggles: Rural banking sector growth has slowed following economic reforms.
4. Remedial Measures - Jan-Dhan Yojana:
  • 4.1 Universal Account Access: All adults encouraged to open bank accounts, leading to over 40 crore new accounts.
  • 4.2 Financial Benefits and Security:
    • 4.2.1 Insurance: Accidental coverage of Rs. 1-2 lakh.
    • 4.2.2 Overdraft Facilities: Access to Rs. 10,000.
    • 4.2.3 Direct Benefit Transfers: Wages, pensions, and other payments directly transferred.
  • 4.3 No Minimum Balance: Removing barriers to banking access.
  • 4.4 Indirect Advantages:
    • 4.4.1 Promoting Thrift: Encourages saving habits.
    • 4.4.2 Efficient Resource Allocation: Aids in proper distribution of financial resources.
    • 4.4.3 Fund Mobilisation: Accumulation of over Rs. 1,40,000 crores through new accounts.
Agricultural Market System
1. Introduction:
  • Agricultural marketing involves several processes like assembling, storage, processing, transportation, packaging, grading, and distribution of agricultural commodities.
  • It's essential for transporting food grains, vegetables, and fruits from different parts of the country to consumers.
2. Challenges Faced by Farmers:
  • Pre-Independence:
    • Farmers faced issues such as faulty weighing and account manipulation.
    • Lack of market information led to selling produce at low prices.
    • Absence of proper storage facilities resulted in significant waste.
  • Post-Independence:
    • Over 10% of farm goods are still wasted due to inadequate storage.
    • Private traders' activities needed regulation to prevent exploitation.
3. Government Interventions:
  • Market Regulation:
    • Aim: Orderly and transparent marketing conditions.
    • Benefit: Both farmers and consumers.
    • Issue: Need to develop 27,000 more regulated rural periodic markets.
  • Infrastructure Development:
    • Includes roads, railways, warehouses, godowns, cold storages, and processing units.
    • Current situation: Inadequate for growing demand.
  • Cooperative Marketing:
    • Aim: Fair prices for farmers’ products.
    • Success Case: Milk cooperatives in Gujarat.
    • Challenges: Inadequate coverage, weak link between marketing/processing cooperatives, and poor financial management.
  • Policy Instruments:
    • Minimum support prices (MSP) for products.
    • Buffer stocks by Food Corporation of India.
    • Food grains and sugar distribution through Public Distribution System (PDS).
    • Goals: Protect farmer income, provide subsidized food to the poor.
4. Private Sector Predominance:
  • Despite interventions, private trade (involving moneylenders, political elites, merchants, rich farmers) still dominates.
  • Large agricultural product share handled by private sector necessitates ongoing government oversight.
5. Debate on Commercialization:
  • Some scholars advocate for restricted government intervention with increased agricultural commercialization for higher farmer incomes.
  • Question for Consideration: Is limiting government intervention beneficial in the context of agricultural commercialization?
Emerging Alternate Marketting Channel
1. Emerging Alternate Marketing Channels
1.1. Direct Sales Benefits: Enables farmers to sell produce directly to consumers, increasing income.
1.2. Examples of Direct Sales Initiatives:
1.3. Fast Food Chains' Involvement:
1.4. Advantages of New Arrangements:
2. Impact on Small Farmers' Incomes
2.1. Income Growth: Arrangements potentially increase small farmers' incomes by minimizing risks and expanding markets.
2.2. Debate: Efficacy and benefits still discussed, varying support levels among farmers.
3. 2020 Indian Agriculture Reforms
3.1. Introduction of Laws: Three laws passed to revamp the agriculture marketing system.
3.2. Farmer Reactions:
3.3. Ongoing Debates: Laws continue to be deliberated and discussed.
3.4. Key Focus for Discussion:
Diversification into Productive Activities
  1. Concept of Diversification:
      2. 1.1. Cropping Pattern Changes: Adjustments in the types of crops grown.
      1.2. Workforce Shift: Movement from agriculture to allied sectors (livestock, poultry, fisheries, etc.) and non-agricultural sectors.
  1. Need for Diversification:
      2. 2.1. Risk Reduction: Less dependency on farming alone minimizes livelihood risks.
      2.2. Sustainable Livelihoods: Offers consistent, productive income sources for rural populations.
  1. Seasonal Employment Disparities:
      2. 3.1. Kharif Season: High concentration of agricultural employment activities.
      3.2. Rabi Season: Lack of irrigation leads to reduced employment opportunities.
  1. Expansion into Other Sectors:
      2. 4.1. Purpose: Provides additional, substantial employment, and higher income levels.
      4.2. Focus Areas: Allied activities, non-farm employment, and emerging alternative livelihoods.
  1. Non-Farm Economy:
      2. 5.1. Dynamic Sub-sectors: Include industries like agro-processing, food processing, leather, tourism, etc.
      5.2. Underdeveloped Sectors: Traditional industries (pottery, crafts, handlooms) lacking infrastructure/support.
  1. Employment Trends by Gender:
      2. 6.1. Rural Women: Primarily engaged in agriculture.
      6.2. Rural Men: Often seek non-farm employment.
      6.3. Recent Trends: Increasing pursuit of non-farm jobs by women (refer to Box 5.2).
The Three Options to Agriculture
1. Animal Husbandry
1.1. Mixed Crop-Livestock System: Common in India; includes cattle, goats, and fowl.
1.2. Benefits: Enhances income stability, food security, and nutrition.
1.3. Employment: Supports 70 million small/marginal farmers and rural women.
1.4. Livestock in India: Poultry (61%), others include cattle, buffaloes, etc.
1.5. Dairy Sector Growth: Tenfold milk production increase from 1951-2016, attributed to 'Operation Flood'.
1.6. Leading States: Gujarat, Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Maharashtra, Punjab, and Rajasthan.
1.7. Emerging Sectors: Meat, eggs, wool, etc.
2. Fisheries
2.1. Cultural Significance: Water bodies seen as 'mother' or 'provider'.
2.2. Development: Advancements due to increased funding and technology.
2.3. Production Contribution: Inland sources (65%), marine (35%).
2.4. GDP Contribution: 0.9% of total GDP.
2.5. Major Fish Producing States: West Bengal, Andhra Pradesh, Kerala, Gujarat, Maharashtra, Tamil Nadu.
2.6. Challenges: Underemployment, low earnings, lack of labor mobility, illiteracy, indebtedness.
2.7. Women in Fisheries: Not involved in active fishing but significant in marketing.
3. Horticulture
3.1. Variety: Diverse crops due to varied climate and soil conditions.
3.2. Economic Role: One-third of agricultural output value, 6% of GDP.
3.3. Global Position: Leading in various fruits and spices; second in fruits and vegetables.
3.4. Impact on Farmers: Improved economic conditions, especially for underprivileged classes.
3.5. Women's Employment: Opportunities in flower harvesting, nursery maintenance, seed production, food processing, etc.
4. Challenges and Needs
4.1. Animal Productivity: Requires technological advancement and breed improvement.
4.2. Veterinary and Financial Services: Essential for sustainable livestock-based livelihoods.
4.3. Fisheries Regulation: Over-fishing and pollution control necessary.
4.4. Community Welfare: Reorientation towards long-term sustainability.
4.5. Horticulture Infrastructure: Investment needed in electricity, storage, marketing, processing, and technology.
These notes summarize the key points for review. However, in-depth understanding might require consultation of the full text or additional resources, especially for dynamically evolving topics. Stay informed about any updates or policy changes affecting these sectors.
4. IT in Agriculture
Other Alternate Livelihood Options: Information Technology (IT) in Agriculture
  1. IT Revolution Impact: 1.1. Sector Transformation: IT has drastically transformed multiple sectors within the Indian economy. 1.2. Sustainable Development: There's a consensus that IT is crucial for achieving sustainability and food security.
  1. Government's Role in Food Security with IT: 2.1. Prediction and Prevention: Using IT tools to identify areas of food insecurity and take preemptive actions. 2.2. Emergency Response: IT enables swift response mechanisms to food scarcity or other agricultural emergencies.
  1. Positive Impacts on Agriculture: 3.1. Information Dissemination: IT facilitates the spread of knowledge about new technologies, market prices, weather forecasts, and best practices for soil and crop management. 3.2. Not a Standalone Solution: While not a direct catalyst, IT serves as a tool to unlock societal knowledge and innovation.
  1. Employment Generation: 4.1. Potential in Rural Areas: IT opens up new job opportunities in rural regions. 4.2. Diverse Opportunities: Beyond traditional farming, IT creates jobs in tech support, data management, and information dissemination related to agriculture.
  1. Experiments and Applications: 5.1. Rural Development: Various parts of India are experimenting with IT applications for rural advancement. 5.2. Case Studies: Specific instances of IT applications in rural areas can provide valuable insights and serve as models for replication.
Sustainable Development & Organic Farming
  • Introduction:
    • Rising Awareness: Understanding of the detrimental effects of chemicals in agriculture is growing.
    • Impact of Conventional Agriculture: Heavy reliance on chemicals affects health, water, livestock, soil, and ecosystems.
    • Eco-friendly Alternative: Organic farming is crucial for sustainable development, balancing ecological aspects.
  • Benefits of Organic Farming:
    • Cost-Efficiency and ROI: Substituting expensive inputs with cheaper, locally-produced organic ones offers better returns.
    • Export Potential: Rising global demand for organic products opens export avenues.
    • Nutritional Superiority: Organic products are often more nutritious.
    • Employment: Demands more labor, benefitting employment rates in places like India.
    • Environmental Sustainability: Ensures production is eco-friendly and sustainable.
  • Challenges and Considerations:
    • Adaptation and Awareness: Requires willingness and knowledge among farmers to shift practices.
    • Infrastructure and Marketing: Inadequate support and market access pose challenges.
    • Initial Yield Reduction: Organic yields can be lower initially, affecting small/marginal farmers.
    • Product Aesthetics and Shelf Life: Organic produce may not appear as visually appealing and can have a shorter shelf life.
    • Crop Variety: Limited options for off-season crops.
    • Pricing: Organic methods can be cost-intensive initially, potentially affecting pricing.
  • Opportunities:
    • Sustainable Agriculture: Despite challenges, organic farming supports sustainable development.
    • Market Advantage: India holds a strategic position in producing for both domestic/international markets.
Conclusion
  • Need for Change:
    • Rural Stagnation: Without significant changes, rural areas risk continued underdevelopment.
    • Diversification: Vital for vibrancy and economic health in rural areas. Includes various sectors like dairy, poultry, fisheries, and horticulture.
  • Infrastructure and Policy:
    • Essential Elements: Credit access, effective marketing, farmer-centric policies, and ongoing dialogue between stakeholders.
  • Environment and Rural Development Interconnection:
    • Inseparable Concerns: Environmental sustainability and rural development must be addressed together.
    • Eco-friendly Technologies: Crucial for sustainable development across varying contexts.
  • Community-Based Solutions:
    • Customized Approaches: Communities should select suitable technologies based on their unique needs.
    • Learning from Success: Adopting best practices from successful models accelerates development through experiential learning.
Chapter 6 - Employment Growth, Informalisation & Other Issues
Introduction
1. Introduction 1.1. Variety in Workplaces: People work in diverse settings including farms, factories, banks, shops, and homes. 1.2. Work from Home: Traditional tasks (weaving, handicrafts) and modern jobs (IT-related) can be performed from home, a trend that grew during the Covid-19 pandemic. 1.3. Importance of Work: Beyond monetary earning, work provides a sense of self-worth, societal contribution, and national development. 1.4. Gandhi's View: Emphasized the value of work-based education and training. 1.5. Work Study Benefits: Helps in understanding employment quality, planning human resources, analyzing industrial contributions to national income, and addressing social issues.
Workers and Employment
2.1. What is Employment? Engagement in activities contributing to a country’s gross national product. 2.2. Who is a Worker? - Individuals engaged in economic activities. - Includes those temporarily not working due to various reasons. - Encompasses both paid employees and the self-employed. 2.3. Economic Contributions: - Activities contributing to gross national product are economic activities. - Consideration of imports and exports leads to the calculation of gross national product. 2.4. Nature of Employment in India: - Varies greatly; includes permanent, temporary, and unfair wage situations. - As of 2017-18, India had a workforce of approximately 471 million. - Higher proportion of workers in rural areas; two-thirds of the total workforce. - Workforce predominantly male (77%). 2.5. Women in Workforce: - Constitute about a quarter of rural and a fifth of urban workforce. - Often engage in unpaid work (cooking, fetching water, farm labor). - Debate exists on whether unpaid women should be classified as workers.
3. Key Concepts 3.1. Gross Domestic Product (GDP): Total money value of all final goods and services produced domestically in a year. 3.2. Gross National Product (GNP): GDP plus net earnings from foreign transactions. 3.3. Economic Activities: Activities that contribute to the GNP. 3.4. Workforce Composition: All individuals engaged in economic activities, irrespective of their employment status or nature of work
Participation of People in Employment
1. Worker-Population Ratio 1.1. Definition: Indicator of the proportion of the population engaged in the production of goods and services. 1.2. Significance: Higher ratio indicates greater people engagement in economic activities. 1.3. Calculation: (Total number of workers / Total population) * 100.
2. Participation Levels in India 2.1. Overall Participation: Approximately 35 out of every 100 persons in India are workers. 2.2. Urban vs. Rural Participation: - Urban areas: About 34 out of every 100 persons. - Rural areas: About 35 out of every 100 persons. 2.3. Reasons for Rural-Urban Disparity: - Limited higher-income opportunities in rural areas. - Higher dropout rates from educational institutions in rural areas to join the workforce. - Urban areas offer diverse employment opportunities and educational pursuits.
3. Gender Disparity in Work Participation 3.1. Men vs. Women: Higher participation rates among males. 3.2. Urban Women: Only 14 out of every 100 urban females engaged in economic activities. 3.3. Rural Women: About 18 out of every 100 rural females participate in the employment market. 3.4. Factors Influencing Low Female Participation: - High income by male members often leads to discouragement for females to work. - Household activities by women not recognized as productive work. - Narrow definition of work undervalues women’s contributions.
4. Critical Discussions 4.1. Underestimation of Women Workers: Household and family farm activities by women are productive yet often unpaid and unrecognized. 4.2. Redefining Work: There's a need to broaden the definition of work to include unpaid, domestic contributions. 4.3. Inclusion Debate: Should unpaid women laborers engaged in household maintenance and family farms be counted as workers?
Self-Employed and Hired Workers
1. Worker Status and Working Conditions 1.1. Significance: Understanding a worker's status helps determine the quality of employment and the worker’s authority within an enterprise. 1.2. Indicators: - Attachment to the job. - Authority over the enterprise and co-workers.
2. Categories of Workers 2.1. Self-Employed: - Definition: Workers who own and operate an enterprise for a livelihood. - Example: Cement shop owner. - Percentage: Comprise about 52% of India's workforce. 2.2. Casual Wage Labourers: - Definition: Workers engaged on a casual basis, receiving remuneration per task. - Example: Construction workers. - Percentage: Account for roughly 25% of the workforce. 2.3. Regular Salaried Employees: - Definition: Workers employed by an entity and receiving wages on a regular basis. - Example: Civil engineer in a construction company. - Percentage: Make up about 23% of the workforce.
3. Gender Distribution in Employment Types 3.1. Self-Employment: Predominant for both genders, over 50% for each. 3.2. Casual Wage Work: Second major source, slightly more for women (24-27%). 3.3. Regular Salaried Employment: Men at 23%, women at 21%, minimal gender gap.
4. Rural vs. Urban Workforce Distribution 4.1. Rural Areas: - Higher percentage of self-employed and casual wage labourers. - Predominance due to independent cultivation on owned land. 4.2. Urban Areas: - Greater share of self-employment and regular wage/salaried jobs. - Regular workers needed due to the nature of urban enterprises.
5. Variations in Work Nature 5.1. Urban Employment: Not everyone can run factories or shops; consistent worker demand for various enterprises. 5.2. Rural Employment: Dominated by self-employment due to independent farming practices
Employment in Firms, Factories, and Offices
1. Economic Development and Labor Flow 1.1. Transition: Labor moves from agriculture to industry and services during economic development. 1.2. Migration: Workers often move from rural to urban areas in search of better opportunities. 1.3. Evolution: At advanced stages, the service sector expands rapidly, overtaking the industrial sector in employment share.
2. Industrial Divisions 2.1. Categories: Economic activities are divided into eight divisions:
  1. Agriculture
  1. Mining and Quarrying
  1. Manufacturing
  1. Electricity
  1. Gas, and Water Supply
  1. Construction & Trade
  1. Transport and Storage
  1. Services
2.2. Major Sectors: - Primary Sector: Includes divisions (i) and (ii). - Secondary Sector: Includes divisions (iii), (iv), and (v). - Service Sector: Includes divisions (vi), (vii), and (viii).
3. Employment Distribution (2017-18) 3.1. Primary Sector: Main source of employment, engaging the majority of India's workforce. 3.2. Secondary Sector: Employs about 24% of the workforce. 3.3. Service Sector: Engages about 31% of workers.
4. Rural vs. Urban Employment 4.1. Rural Areas: - Agriculture, forestry, and fishing dominate, engaging about 60% of the workforce. - Manufacturing, construction, and other industries engage about 20%. - Service sector also engages about 20%. 4.2. Urban Areas: - Service sector predominates, employing about 60% of workers. - Secondary sector engages about one-third of the workforce. - Agriculture is not a major employer.
5. Gender Disparities in Employment 5.1. Primary Sector Concentration: More female workers (about 57%) are in the primary sector compared to males (less than half). 5.2. Opportunities for Men: Men have more opportunities in both the secondary and service sectors.
6. Implications
  • The data indicates a significant reliance on the primary sector for employment, especially in rural areas and among women.
  • Urban areas display a more diversified employment landscape, with a notable tilt towards the service sector.
  • These trends highlight the importance of evolving economic opportunities, education, and skill development to shift the workforce towards more sustainable and progressive sectors.
Growth and Changing Structure of Employment
1. Overview: 1.1. Context: The segment discusses the growth and changing structure of employment in India against the backdrop of its planned economic development, highlighting the disparity between GDP and employment growth.
2. Growth of Employment and GDP: 2.1. Period 1950–2010: Positive GDP growth, higher than employment growth, with notable fluctuations. 2.2. Employment growth rate: Capped at 2% during the same period. 2.3. Late 1990s: A decline in employment growth, returning to levels seen in the early planning stages.
3. Jobless Growth: 3.1. Phenomenon: Despite increasing GDP, employment generation was low, referred to as "jobless growth". 3.2. Gap between GDP and Employment: The period showed an increasing gap, indicating efficiency in producing more with less manpower.
4. Impact on Workforce Sections: 4.1. Need: Understanding how GDP and employment growths affected workforce segments. 4.2. Aim: Discerning the types of employment generated.
5. Agricultural Dependence: 5.1. Background: India’s major workforce resides in rural areas, primarily depending on agriculture. 5.2. Developmental Goal: Strategies aimed at reducing the proportion of people in agriculture.
6. Shift in Workforce Distribution: 6.1. 1972-73 vs. 2011-12: Significant workforce shift from farm work (primary sector) to non-farm work (secondary and tertiary sectors). - Primary sector: Decreased from 74% to 50%. - Secondary sector: Increased from 11% to 24%. - Tertiary sector: Increased from 15% to 27%. 6.2. Post-2011 Trends: Stagnation in the secondary sector, moderate rise in self-employment.
7. Casualisation of Workforce: 7.1. Period 1972-94: Movement from self-employment and regular salaried employment to casual wage work. 7.2. Impact: Increased vulnerability of the workforce.
8. Changes in Employment Type (2017-18): 8.1. Observation: Moderate rise in the share of regular salaried employees. 8.2. Implication: Needs further exploration and explanation in class discussions
Informalisation of Indian Workforce
1. Development Planning and Employment: 1.1. Post-independence, India aimed for industrialisation to move workers from agriculture to industries, hoping to provide a better standard of living. 1.2. Despite these efforts, over 70 years later, more than half of India's workforce still relies on farming.
2. Quality of Employment: 2.1. Concerns have been raised about the deteriorating quality of employment. 2.2. Issues include lack of benefits like maternity leave, provident fund, gratuity, and pension, especially prevalent among long-term workers. 2.3. Discrepancies exist between salaries of private sector employees vs. public sector employees, despite similar job roles.
3. Workforce Classification: 3.1. The workforce is divided into two main sectors: formal (organized) and informal (unorganised). 3.2. Formal sector: Includes public sector establishments and private sector establishments with 10 or more hired workers. 3.3. Informal sector: Comprises small enterprise owners, farmers, agricultural laborers, self-employed individuals without hired workers, and non-farm casual wage laborers (e.g., construction workers).
4. Formal vs. Informal Sector: 4.1. Formal sector workers enjoy more benefits and social security, and generally earn more. 4.2. Development planning initially hoped for an increase in formal sector employment with economic growth, reducing the informal sector's size.
5. Current Employment Statistics: 5.1. As of 2011-12, India had about 473 million workers. 5.2. Only about 30 million, or roughly 6%, were in the formal sector. 5.3. A significant gender disparity exists in employment sectors; 20% of formal sector and 30% of informal sector workers are women.
6. Focus on the Informal Sector: 6.1. From the late 1970s, attention turned to the informal sector as formal employment growth stagnated in many developing countries, including India. 6.2. Challenges in the informal sector include irregular income, lack of government regulation, outdated technology, absence of account maintenance, and poor living conditions. 6.3. Recent initiatives, influenced by the International Labour Organisation (ILO), focus on modernising informal sector enterprises and providing social security to its workers
Unemployment
1. Introduction to Unemployment: 1.1. Definition: Unemployment refers to the situation where individuals who are capable of working and are actively seeking work are unable to find employment. 1.2. Identification: Unemployed persons are those unable to secure employment for even one hour in half a day, despite seeking opportunities through various means.
2. Job Search Methods: 2.1. Newspapers, friends, and relatives. 2.2. Standing in select areas in cities seeking daily work. 2.3. Submitting bio-data directly to factories and offices. 2.4. Registering with employment exchanges.
3. Unemployment Data Sources: 3.1. Reports of the Census of India. 3.2. National Statistical Office’s Reports of Employment and Unemployment Situation. 3.3. Annual Reports of Periodic Labour Force Survey. 3.4. Directorate General of Employment and Training data of Registration with Employment Exchanges.
  • Note: These sources offer different unemployment estimates but provide insights into the characteristics of the unemployed and the nature of unemployment in the country.
4. Types of Unemployment: 4.1. Open Unemployment: - Scenario: Individuals are actively seeking work but remain unemployed. 4.2. Disguised Unemployment (especially in agriculture): - Definition: It occurs when more people are employed than actually needed, masking the extent of unemployment. - Example: A farmer employs more workers (including family members) than necessary for the volume of work available. - Study Finding: Late 1950s study showed about one-third of agricultural workers in India were disguisedly unemployed.
5. Seasonal Nature of Agricultural Work: 5.1. Observation: Many individuals migrate to urban areas for work but return to their villages during the rainy season. 5.2. Reason: Agricultural work is seasonal, with limited employment opportunities throughout the year. When farm work is unavailable, individuals seek jobs in urban areas.
6. Summary:
  • Unemployment in India is a significant issue, manifesting primarily as open and disguised unemployment.
  • Various methods are used by individuals to seek jobs, and different government reports assess the unemployment situation.
  • Seasonal agricultural work patterns often force rural inhabitants to migrate for employment opportunities
Government's Role in Employment Generation
1.1. Background: The government has been instrumental in creating job opportunities since Independence, utilizing both direct and indirect strategies. 1.2. Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA): - Offers 100 days of assured wage employment to rural households opting for unskilled manual work. - Part of government measures to provide jobs in rural sectors.
2. Direct and Indirect Employment Strategies: 2.1. Direct Employment: - Government hires for administrative roles, runs industries, hotels, transport companies, etc. - Contributes directly to job creation. 2.2. Indirect Employment: - Increase in output of government enterprises leads to higher demand from private enterprises, creating more jobs. - Example: Expansion in a government-owned steel company can spur growth in private companies purchasing steel, thereby creating jobs.
3. Employment Generation Programs: 3.1. Aimed at poverty reduction through job creation. 3.2. Provide services beyond employment, like health, education, water, nutrition, etc. 3.3. Involve community asset development, housing construction, sanitation, rural road development, wasteland rehabilitation, etc.
4. Changing Employment Structure: 4.1. New Job Sectors: Predominantly in the service sector. 4.2. Technology's Role: Facilitates competitive small-scale and individual enterprises alongside big companies. 4.3. Outsourcing Trends: Large firms allocate specialist tasks to smaller entities or individuals, often internationally. 4.4. Workplace Evolution: Shift from traditional office spaces to home-based work setups.
5. Challenges and Worker Impact: 5.1. Informal Nature of Employment: Growing trend, with limited social security for workers. 5.2. Jobless Growth: GDP growth without proportional employment opportunities, prompting government intervention.
6. Conclusion:
  • While there's a shift in job structures and sectors, with technology playing a significant role, the growth hasn't favored individual workers due to increased informality and insufficient social security.
  • GDP growth hasn't correlated with job opportunities, necessitating government initiatives, especially in rural areas, for employment generation
Chapter 7 - Environment & Sustainable Development
Introduction
  • 1.1 Economic Development and Environmental Cost: India's economic progress has been achieved at a significant environmental cost.
  • 1.2 Need for Sustainable Development: The era of globalization promises economic growth, but it's crucial to pursue sustainable development to avoid repeating past environmental mistakes.
  • 1.3 Chapter Structure: This chapter explores the environment's role in development, examines India's environmental status, and discusses sustainable development strategies.
Environment: Definition and Functions
2.1 Definition: The environment encompasses all resources and includes both biotic (living) and abiotic (non-living) elements.
2.2 Functions:
  • 2.2.1 Supplies Resources: Both renewable (e.g., trees, fish) and non-renewable (e.g., fossil fuels).
  • 2.2.2 Assimilates Waste: Has a capacity to absorb and process waste.
  • 2.2.3 Sustains Life: Maintains genetic and biodiversity essential for life.
  • 2.2.4 Provides Aesthetic Services: Offers elements like beautiful scenery.
2.3 Carrying Capacity: The environment functions effectively if resource use and waste are within its carrying capacity.
3. Environmental Crisis
3.1 Current Crisis: Global environmental issues, such as resource depletion and waste accumulation, exceed the environment's carrying capacity.
3.2 Consequences:
  • 3.2.1 Resource Exhaustion: Over-extraction has depleted essential resources.
  • 3.2.2 Health Costs: Pollution leads to health issues, increasing medical expenses.
  • 3.2.3 Financial Commitments: Addressing global issues like global warming requires significant funds.
3.3 High Opportunity Costs: Negative environmental impacts entail substantial costs.
4. Historical Perspective
4.1 Environmental Problems in Context: These issues weren't prominent in the past due to lower population and minimal industrial activity.
4.2 Change Over Time: The industrial revolution and population growth have reversed the supply-demand relationship for environmental resources.
5. Current Environmental Challenges
5.1 Increased Demand: Industrialization and population explosion have escalated the demand for resources
5.2 Supply Limitation: Overuse and misuse limit the availability of environmental resources and services.
5.3 Critical Issues: Waste generation and pollution are urgent environmental problems needing attention.
6. Conclusion
6.1 Sustainable Development Imperative: There's an urgent need to address environmental issues through sustainable practices to ensure a balance between economic growth and environmental preservation
State of India’s Environment
1. Overview of India's Environment:
  • Rich in natural resources: quality soil, rivers, forests, minerals, ocean, and mountains.
  • Key agricultural regions: Deccan Plateau (cotton), Indo-Gangetic plains (fertile).
  • Resources: iron-ore, coal, natural gas, bauxite, copper, etc.
  • Environmental concerns: due to development activities.
2. Environmental Challenges: 2.1. Dichotomy in Threats: - Poverty-induced degradation. - Pollution from industrial growth. 2.2. Major Concerns: - Air pollution. - Water contamination. - Soil erosion. - Deforestation. - Wildlife extinction.
3. Priority Issues:
  • Land degradation.
  • Biodiversity loss.
  • Air pollution (especially vehicular).
  • Freshwater management.
  • Solid waste management.
4. Causes of Land Degradation:
  • Deforestation.
  • Unsustainable extraction activities.
  • Shifting cultivation.
  • Encroachments and forest fires.
  • Inadequate soil conservation.
  • Misuse of agro-chemicals.
  • Improper irrigation.
  • Excessive groundwater extraction.
5. Population Pressure:
  • Supports 17% of the world's humans, 20% of livestock.
  • High density causes pressure on land resources.
6. Forest Depletion:
  • Per capita forest land lower than requirement.
  • Excessive felling beyond permissible limit.
7. Soil Erosion:
  • Significant loss of soil and essential nutrients annually.
8. Air Pollution:
  • Predominant in urban areas.
  • Major contributor: vehicular emissions.
  • Rapid increase in motor vehicles since 1951.
9. Industrialization Consequences:
  • Unplanned urbanization.
  • Increased pollution and accident risk.
  • 17 significantly polluting industry categories identified.
10. Measures and Sustainable Development:
  • Efforts by Ministry of Environment, central and state boards.
  • Need for a conscious path towards sustainable development.
  • Importance of considering future generations for lasting development
Sustainable Development
1. Interdependence of Environment and Economy:
  • Development impacts the environment.
  • Unsustainable development harms the environment, affecting all life forms.
2. Sustainable Development:
  • Ensures future generations have quality of life at least as high as current ones.
  • Defined by UNCED: Development meeting present needs without compromising future generations.
  • Key concepts: 2.1. Needs: Linked to resource distribution, aimed at meeting everyone's basic needs. 2.2. Future Generations: Moral obligation to maintain earth for them.
3. Implications of Sustainable Development:
  • Aims to reduce absolute poverty.
  • Provides secure livelihoods, minimizing resource depletion, environmental degradation, cultural disruption, and social instability.
  • Growth in sectors like agriculture, manufacturing, power, etc., to meet basic needs.
4. Brundtland Commission:
  • Focus on protecting future generations.
  • Present should enhance natural and built environments in a way that benefits the future.
  • Moral obligation to pass on a better environment.
5. Strategies for Sustainable Development (Herman Daly):
5.1. Population Control: Limit to carrying capacity of the environment. 5.2. Technological Progress: Should be efficient, not input-consuming. 5.3. Renewable Resources: Extracted sustainably; regeneration rate should be higher or equal to extraction rate. 5.4. Non-renewable Resources: Depletion rate should not exceed creation of renewable substitutes. 5.5. Pollution: Correct inefficiencies arising from it.
6. UN's Sustainable Development Goals (SDGs):
  • 17 goals formulated in 2015, to be achieved by 2030.
  • Need to collect details and discuss in the Indian context
Strategies for Sustainable Development

1. Use of Non-Conventional Energy Sources:

  • Context: India's heavy dependence on thermal and hydro power has significant environmental drawbacks, including carbon dioxide emissions and potential ecological disruption.
  • Alternative Approach: Emphasis on non-conventional energy sources, such as wind and solar power, which have less environmental impact. Local initiatives need to be identified and discussed for a more comprehensive understanding.

2. LPG and Gobar Gas in Rural Areas:

  • Problem: Rural areas often rely on wood, dung cakes, and other biomass for fuel, leading to deforestation, reduced green cover, and air pollution.
  • Solutions:
    • LPG: Provision of subsidized Liquefied Petroleum Gas (LPG), a clean fuel that significantly reduces household pollution and minimizes energy wastage.
    • Gobar Gas Plants: These installations, supported by subsidies and loans, use cattle dung to produce biogas for fuel, with the leftover slurry serving as a potent fertilizer.

3. CNG in Urban Areas:

  • Initiative: The introduction of Compressed Natural Gas (CNG) in public transport, notably in Delhi, has markedly reduced air pollution, inspiring its adoption in other Indian cities.

4. Wind Power:

  • Functionality: In high-wind areas, windmills generate electricity without harmful environmental impacts, albeit with high initial costs.
  • Benefits: Despite the investment needed, the environmental advantages and potential for sustainable energy production justify the expense.

5. Solar Power through Photovoltaic Cells:

  • Resource Utilization: India's abundant sunlight is a natural asset. Photovoltaic technology converts solar energy into electricity, providing a clean, efficient energy solution, especially in remote areas.
  • Leadership: India's efforts to augment solar power generation reflect its pivotal role in the International Solar Alliance (ISA).

6. Mini-Hydel Plants:

  • Application: In mountain regions, small-scale hydel plants harness stream energy to produce electricity locally, with minimal environmental disruption and no significant alteration to land use patterns.
  • Advantage: These plants negate the need for extensive power transmission infrastructure, reducing transmission losses.

7. Traditional Knowledge and Practices:

  • Cultural Insight: Historically, Indian societal practices, spanning agriculture, healthcare, and transportation, have emphasized environmental harmony.
  • Revival: There's a resurgence in traditional, eco-friendly systems, including Ayurveda and Unani, paralleled by a growing preference for herbal products, which are environmentally sustainable and side-effect free.

8. Biocomposting:

  • Reversion: After prolonged reliance on chemical fertilizers, Indian agriculture is reverting to organic composting, using waste materials for soil enrichment.
  • Impact: This shift benefits land health, water quality, and biodiversity, and promotes sustainable agricultural practices.

9. Biopest Control:

  • Necessity: The adverse effects of chemical pesticides have prompted a shift towards natural pest control methods.
  • Methods: Utilizing plant-based pesticides, like neem extracts, and ecological techniques, such as crop rotation and fostering predator species (e.g., snakes, birds) for biological pest control.

10. The Concept of Sustainable Development:

  • Philosophy: Sustainable development, while interpreted diversely, fundamentally advocates for enduring, inclusive welfare and environmental stewardship.
  • Global Perspective: It represents a paradigm shift in developmental approaches, prioritizing long-term ecological balance and human well-being.
Unit 4 - Developing of Experience of India : A Comparison with Neighbours
Chapter 8 - Comparative Development Experiences of India and Its Neighbours
Developmental Strategies of India, China, and Pakistan
1. Introduction
  • Study of India's developmental experience.
  • Global economic transformations impact every nation.
  • Formation of regional and global economic groupings: SAARC, European Union, ASEAN, G-8, G-20, BRICS etc.
  • Importance of understanding neighboring nations' development processes.
2. Comparison of Developmental Strategies
  • Focus on India, Pakistan, and China.
      • Background
  • India: Largest democracy, secular and liberal constitution.
  • Pakistan: Militarist political power structure.
  • China: Command economy, recent shift towards democracy and economic liberalization.
3. Developmental Path—A Snapshot
  • India, Pakistan, and China began development around the same time.
    • India and Pakistan: Independence in 1947.
    • China: People’s Republic established in 1949.
  • Developmental Planning
    • India: First Five Year Plan (1951–56).
    • Pakistan: First five year plan in 1956 (now Medium Term Development Plan).
    • China: First Five Year Plan in 1953.
  • Similar strategies: Large public sector, public expenditure on social development.
4. China's Developmental Path
  • One-party rule post-establishment.
  • Great Leap Forward (1958)
    • Aim: Massive industrialization.
    • Encouraged personal industries.
    • Communes in rural areas: Collective cultivation.
  • Challenges faced by GLF
    • Severe drought causing millions of deaths.
    • Withdrawal of Russian professionals.
  • Great Proletarian Cultural Revolution (1966–76)
    • Sending students/professionals to countryside.
  • Reforms (1978 onwards)
    • Phased introduction.
    • Initial focus on agriculture, foreign trade, and investment.
    • Industrial sector reform in later phases.
    • Introduction of dual pricing.
    • Creation of special economic zones.
5. Pakistan's Developmental Path
  • Mixed economy model.
  • 1950s & 1960s
    • Regulated policy framework for import substitution-based industrialization.
    • Green Revolution: Mechanisation and public infrastructure investment.
  • 1970s
    • Nationalisation of capital goods industries.
  • Late 1970s & 1980s
    • Policy shift towards denationalisation and private sector encouragement.
    • Received financial support from the west and remittances from the Middle-east.
  • Reforms initiated in 1988.
6. Conclusion
Important to compare developmental indicators of India, China, and Pakistan for a comprehensive understanding
Demographic Indicators: India, China, and Pakistan
1. Global Population Perspective
  • Global Ratio: For every 6 people globally:
    • 1 is Indian.
    • 1 is Chinese.
  • Population Size:
    • China and India have significant populations.
    • Pakistan's population is roughly one-tenth of China or India.
2. Geographical and Density Comparison
  • Land Area:
    • China has the largest geographical area among the three.
  • Density:
    • China has the lowest population density.
    • India has higher density given its population and land area.
    • Pakistan's density falls in between.
3. Population Growth
  • Ranking:
    • Pakistan: Highest growth.
    • India: Moderate growth.
    • China: Lowest growth.
  • China's One-Child Policy:
    • Introduced in the late 1970s.
    • Major reason for China's low population growth.
    • Resulted in a skewed sex ratio.
4. Sex Ratio
  • Low and biased against females in all three countries.
  • Reason:
    • Prevailing son preference in these countries.
  • Measures:
    • All three countries are taking steps to address this bias.
5. Future Implications of Population Controls
  • China's Aging Population:
    • Due to the one-child policy, China will see a higher proportion of elderly people in the coming decades.
    • Resulted in China allowing couples to have two children to balance demographics.
6. Fertility and Urbanization
  • Fertility Rate:
    • China: Low fertility rate.
    • Pakistan: High fertility rate.
    • India: Moderate fertility rate.
  • Urbanization:
    • China: High urban population.
    • India: 34% of the population resides in urban areas.
    • Pakistan: Urbanization rate falls in between.
Gross Domestic Product and Sectors: India, China, and Pakistan
1. GDP Overview
  • Global Rankings:
    • China: 2nd largest GDP (PPP) - $22.5 trillion.
    • India: GDP (PPP) - $9.03 trillion (41% of China's GDP).
    • Pakistan: GDP - $0.94 trillion (11% of India's GDP).
2. Growth Rates
  • China:
    • Maintained near double-digit growth in the 1980s.
    • Top growth even when developed countries struggled.
  • India:
    • Moderate growth rate.
    • Saw an increase in growth rate in 2015-17.
  • Pakistan:
    • Initially ahead of India in the 1980s.
    • Decline in growth rate by 2015-17, attributed to reforms and political instability.
3. Sector Contribution to GDP (now Gross Value Added)
  • China:
    • 10% of land suitable for cultivation.
    • 1980s: 80% dependent on farming.
    • 2018-19: 26% workforce in agriculture, contributing 7% to GVA.
  • India:
    • 43% workforce in agriculture, contributing 16% to GVA.
    • 25% in industry contributing 30% to GVA.
  • Pakistan:
    • 41% workforce in agriculture, contributing 24% to GVA.
    • 24% in industry contributing 19% to GVA.
4. Service Sector Dominance
  • Major contributor to GVA in all three countries.
  • 1980s Workforce in Service:
    • China: 12%
    • India: 17%
    • Pakistan: 27%
  • 2019 Workforce in Service:
    • China: 46%
    • India: 32%
    • Pakistan: 35%
5. Developmental Transition
  • Typical Progression:
    • Shift from agriculture -> industry -> services.
  • China:
    • Transition seen from agriculture to industry and services.
  • India & Pakistan:
    • Direct shift from agriculture to services, bypassing significant growth in industry.
6. Sectoral Growth in Last Five Decades
  • Agriculture: Decline in all three countries.
  • Industry:
    • China: High growth in the 1980s, recent decline.
    • India & Pakistan: Decline in growth rate.
  • Service:
    • China: Maintained growth in 1980-1990.
    • India: Positive and increasing growth.
    • Pakistan: Deceleration in all sectors
Indicators of Human Development
1. Overview:
  • Human Development Indicators: These are statistical representations that provide a measure of the social, economic, and educational status of a country's population.
  • Countries in Focus: The discussion involves a comparative analysis of human development indicators among India, China, and Pakistan.
2. Comparative Analysis:
  1. China's Progress:
      • Leads in several indicators including GDP per capita, health parameters, and poverty reduction.
      • Notable performance in sanitation and providing improved drinking water.
      • Lower maternal mortality rates (29 per 100,000 births).
  1. India's and Pakistan's Challenges:
      • Higher maternal mortality rates (India: 133, Pakistan: 140 per 100,000 births).
      • Struggle with poverty reduction and sanitation facilities, though there's progress in providing improved water sources.
  1. Surprising Similarities:
      • All three countries have succeeded in providing improved drinking water sources to the majority of their population.
3. Limitations of Human Development Indicators:
  • Insufficiency: Current indicators are crucial but not comprehensive.
  • Need for Liberty Indicators: There's a lack of measures for democratic participation, constitutional protection of citizens' rights, and independence of the judiciary.
    • These indicators are essential for a more holistic view of human development.
  • Impact on HDI Construction: Without liberty indicators, the current Human Development Index (HDI) is considered incomplete and its utility is constrained.
4. Suggestions for Improvement:
  • Inclusion of Liberty Indicators: To enhance the HDI's effectiveness, indicators measuring democratic freedom, rule of law, and constitutional safeguards should be incorporated.
  • Weightage to New Indicators: These new liberty indicators should be given significant importance in the overall HDI calculation to reflect a country's true development status.
5. Reflection:
  • Understanding Disparities: The differences in the indicators among these countries could be due to various factors like economic policies, governmental efficiency, cultural factors, and historical contexts.
  • Importance of Holistic Analysis: It underscores the necessity of adopting a broader perspective that includes liberty and democratic parameters while assessing a nation's development
Developmental Strategies
1. Development Strategies: Overview
  • Development strategies often serve as models for other countries.
  • Understanding the roots of successes and failures is crucial.
  • Different phases of strategies must be contrasted.
  • Reforms were initiated at different times: China (1978), Pakistan (1988), India (1991).
2. China's Reforms in 1978
  • 2.1 Reasons for Reforms
    • No external compulsion; internal decision.
    • Unhappiness with slow growth, lack of modernisation under Maoist rule.
    • Maoist economic vision considered failed.
  • 2.2 Pre-Reform Period
    • Per capita grain output stagnant.
    • Extensive land reforms, collectivisation, Great Leap Forward didn’t yield expected results.
  • 2.3 Post-Reform Achievements
    • Infrastructure improvement in education, health.
    • Positive impact of previous land reforms, decentralised planning, small enterprises.
    • Equitable food distribution via commune system.
    • Reforms led to rapid growth, especially agricultural reforms benefiting the poor.
3. Pakistan's Reforms
  • 3.1 Post-Reform Challenges
    • Economic indicators worsened.
    • Growth rate of GDP lower compared to 1980s.
    • Re-emergence of poverty after initial decrease.
  • 3.2 Causes
    • Dependence on good harvests rather than institutionalised technical change.
    • Economy heavily reliant on remittances, volatile agricultural exports.
    • Increasing foreign debt and repayment issues.
  • 3.3 Recent Recovery
    • GDP growth of 5.5% in 2017-18, highest in the previous decade.
    • Industry and service sectors experienced growth.
    • Several macroeconomic indicators stabilized.
4. India's Reforms
  • 4.1 Context
    • Reforms were initiated due to a crisis, with IMF and World Bank involvement.
    • Focus on balance of payments and building foreign exchange earnings.
5. Comparative Analysis
  • 5.1 China
    • Reforms were internally driven, focused on correcting the failures of past policies.
    • Large-scale positive impact, leading to significant economic growth.
  • 5.2 Pakistan
    • Faced economic hardships post-reform, with reliance on external factors like remittances.
    • Recent years show signs of recovery and stabilization.
  • 5.3 India
    • Details not elaborated in the text, but reforms were crucial for economic stabilization
Conclusion: Developmental Experiences of Neighbouring Countries
1. Overview
  • India, China, and Pakistan have experienced seven decades of development with diverse outcomes.
  • Until the late 1970s, all three maintained similar levels of low development.
2. Divergent Paths Post-1970s
  • The past three decades have seen these nations reach different developmental stages.
3. India's Developmental Journey
  • 3.1 Democratic Institutions
    • Moderate performance in the context of its democracy.
  • 3.2 Economic Dependence
    • Majority population still reliant on agriculture.
  • 3.3 Infrastructure and Living Standards
    • Numerous initiatives undertaken to enhance infrastructure and quality of life.
4. Pakistan's Economic Challenges
  • 4.1 Political and Economic Instability
    • Factors like political instability, reliance on remittances, and inconsistent agricultural performance contributing to economic slowdown.
  • 4.2 Signs of Recovery
    • In the last five years, improvements in various macroeconomic indicators signal economic recuperation.
5. China's Growth Story
  • 5.1 Political Context
    • Absence of political freedom and human rights concerns.
  • 5.2 Economic Strategy
    • Utilized the market system without compromising political commitments.
    • Significant growth and poverty reduction over four decades.
  • 5.3 Unique Approaches
    • Unlike India and Pakistan, avoided privatization of public sector enterprises.
    • Employed market mechanisms to generate social and economic opportunities.
  • 5.4 Land Ownership and Social Security
    • Maintained collective land ownership, granting cultivation rights to individuals.
    • Ensured rural social security.
  • 5.5 Social Infrastructure
    • Public intervention in social infrastructure, even pre-reforms, led to positive human development outcomes.
6. Comparative Insights
  • 6.1 Varied Developmental Models
    • Each country showcases different strategies and outcomes, influenced by political, economic, and social choices.
  • 6.2 Lessons Learned
    • Development is a multifaceted process, with diverse paths and models.
    • No one-size-fits-all approach; strategies must be tailored to each country’s unique context
 
Copyright 2022 UPSC Vision